In no hurry to fly the nest

RICHARD MEADOWS
Last updated 05:00 13/08/2014

The best way to get kids saving

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Jake Dawson
Rose Cawley
CAPITAL CHOICE: Primary school teacher Jake Dawson saved so much money by living at home that he graduated university debt-free, with enough savings for a jaunt around Southeast Asia.

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They call them Kippers - that's "kids in parents' pockets, eroding retirement savings".

A growing horde of man- and woman-children are returning to the comforts of home, or refusing to spread their wings and fly the nest in the first place.

The trend goes well beyond the stereotypical socially inept male, still living in mum's basement into his 30s.

In 2001, there were 110,000 people aged over 21 still living at home. As of the latest 2013 census, that number had jumped by over 36 per cent to more than 150,000.

The dramatic change is a phenomenon that apparently transcends cultures. The Japanese call them "Parasite singles", while the other popular term in the western world is the "Boomerang Generation".

The question is whether this new wave of house-bound adult children are indeed parasitic moochers, or actually making a sensible financial decision.

For many of Stuart + Carlyon financial adviser Susanna Stuart's clients, it is a source of angst.

"Obviously you're flesh and blood - you don't just turn them away," she says.

But it has not always been this way.

"I think of my contemporaries, we couldn't wait to leave home," says Stuart. "When I had to go to university, I even chose another town so I could go into the halls of residence."

There was never any thought of dropping off a load of laundry at home, much less actually moving back in, says Stuart.

So what has changed? For a start, housing has become much more expensive, especially in Auckland.

National house prices are about 5.5 times the median household income, and well over the seven times mark in much of Auckland.

Reserve Bank data shows that back in 1980, when Stuart was making her start in the world, the multiple was as low as two times household income.

The job market may also have changed, she says. Not everyone can move seamlessly from job to job, which means there may be periods when young adults have to fall back on their folks' generosity.

Then there are the changing social attitudes. Stuarts reckons parents have become softer, and often have more of a "chummy" relationship with their offspring than a traditional parental one.

For some families, that works out just fine. Recent research by the United Kingdom's National Housing Federation found just over a quarter of those surveyed said having an adult child at home brought the family closer together.

But tellingly, nearly the same proportion said the situation was stressful, and almost as many again said it caused arguments.

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There does not appear to be any magic number for how long it is appropriate to mooch off mum and dad.

One of the only pieces of research on the topic, from the United States, found that millennials (aged 18-34) reckoned up to five years after uni was fine.

Assuming three years of study, that would mean the cutoff was roughly 26 years.

Funnily enough, those aged over 55 had a less tolerant view. They said children should be gone three years after graduation, while men were willing to tolerate just two years.

Those who do have a harmonious relationship with their parents might do well to stay home for as long as possible.

Living rent-free has enormous benefits - typically a saving of at least $150 a week in major cities.

But that is only the beginning. There's electricity, water, laundry, TV, phone and internet, and cleaning supplies.

Conservatively, these will cost at least another $25 a week, per person.

With food typically another $100 a week, those who get served up home-cooked meals or raid the refrigerator are really in clover.

All up, a stay-at-home child will probably be able to save anything from $7000 to $14,000 a year, compared to living independently.

For Auckland primary school teacher Jake Dawson, those sort of savings were too good to pass up.

The 22 year-old lived at his parents' home in Whangaparaoa throughout university, and says it never even crossed his mind to move out.

"The deal that mum and dad had with me was that I got to live at home while being educated, as long as I didn't get a loan," he says.

Dawson worked throughout uni, and not only graduated debt-free but with enough savings to fund a trip through Southeast Asia.

Now that he is earning full-time, he has found a flat in Mount Eden, and says he is enjoying the feeling of being "fully free".

Stuart says living at home while studying in the same city is sensible.

"It gives the person studying a chance to not be distracted by all the practicalities," she says. "Most parents are happy to do that, as long as they don't stay on forever."

Once in full-time work, it becomes a very different story.

There are two possible pathways. The first is the dreaded perma-child, who wants all the privileges of adult life with none of the responsibilities.

The second is someone who uses the time at home strategically, banks the money saved, and has a plan for reaching independence.

Those that swallow their pride and endure their parents' attention on a daily basis will probably be able to save a house deposit much faster, for example.

Where it crosses into freeloading is failure to pay some kind of rent, board or other contribution to the family coffers. Household chores are a given.

Moneymax financial planner Liz Koh has three daughters, aged 24 to 33, and is a strong advocate for adult children pulling their weight.

Her youngest moved from Paraparaumu to Auckland at the ripe old age of 16-and-a-half, while the others also moved out promptly to make their way in the world.

Koh has only had one brief boomerang moment since, and even then her daughter paid some board.

"If it was a long-term arrangement, I would definitely charge market rates," she says.

Koh says she has often had to be firm with her clients, some of whom are trying to save for retirement while supporting adult children, and sometimes attached partners and children too.

"People associate money with love. There's a tendency for some people to buy the affection of their children by giving them things."

But that can often be counter-productive,  says Koh.

"It's really good to help your kids. But you've got to do it in such a way that doesn't give them a false sense of reality."

In many cases, children who are coddled with all the comforts of home never learn to manage money properly.

Koh suggest charging market rent or board, and making it into an exercise in compulsory savings.

When they actually move out, some of that sum can be repaid to help with setting up a flat or even putting a deposit down on a house.

Empty-nest syndrome is becoming less and less common. Whether that is a good or a bad thing clearly depends entirely on how the dynamic is managed.

The Families Commission offers these tips:

- Don't treat adult children like when they were a child.
- Don't do things they can do for themselves, like laundry.
- Don't let them rule the house, for example with behaviour that is unpleasant for other members of the family.
- Make sure you and your partner take the same approach. Don't let one of you be a soft touch.
- Take every opportunity to help your son or daughter learn to cook, budget and generally look after themselves.
- If they have their own income, work out together how much they should be contributing for household costs.
- If they do not have income, work out other ways they can contribute, such as looking after the garden or doing home maintenance.
- When they are contributing, acknowledge it.

Are you part of the Boomerang Generation, or a parent of stay-at-home children? Do you think there's a certain age they should move out?

- Stuff

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