Young working adults living with parents should contribute financially, adviser says

By Mahvash Ikram of RNZ

There was a time when Kiwi kids could not wait to fly the coop.

But latest StatsNZ figures show households are changing and nearly three in 10 New Zealanders aged 20 to 29 still live with Mum and Dad.

So who should pay what and when should young adults start paying rent?

One Aucklander told First Up it depended on the family’s financial situation and if the children were employed.

Another person said parents should never ask their children to pay to stay at home.

“You as a parent should take care of your child till he is dead, that’s your whole point. If the day comes that I have to make my son pay rent, [I will] not be a good father then.”

Sophia Peach, 24, lived at home with her parents.

“I can’t afford to live by myself, plus I have a dog and it would be a lot harder for me to get a rental with a dog and to be able to afford the rent with a dog.”

She started paying board at the age of 18.

But recently her mum and dad lost their source of income, so she started contributing towards the mortgage.

“I don’t get paid enough to survive that by myself. So my parents, they have enough of it, income, to be able to top up the mortgage. But I have to pay the majority.”

Despite that, Peach, who worked for a security company, believed she was better off living with her parents in their Auckland home.

“It would cost me about $650 to $750 a week for a one- to two-bedroom to rent, and I earn about a grand a week. At this rate, staying at home, even though I am paying the mortgage, I will get that back when they sell, so I am actually basically investing. I get to save money. So in the long run, I feel that I am coming out on top instead of just wasting money on rent.”

Trade Me property data showed it was not just Peach who did not want to share a flat with strangers.

Although flatmates wanted ads were up by nearly 18%, demand was down by about 57%.

Meanwhile, the average rent price for a single room had gone up by around 2%.

Business commentator Bernard Hickey said staying at home with Mum and Dad often gave young people the chance to save for a house.

“They really need to some how reduce their rents because not only have they got other living costs, including starting to repay student loans, but with very high rents often rising as fast as incomes, there’s very little room to save for a deposit.”

But financial adviser Vinessa Orsbourne had a message for young adults still living at home.

“They should contribute in some way because what will actually happen is if they don’t and then they find themselves in a situation where they have to move out, you’re doing them a disservice not getting them prepared for that.”

She said parents needed to decide when to start charging rent or board depending on their child’s situation.

“If the child has finished their education and they’re actually employed, then yes, they need to be contributing.

“Second, I think it’s a discussion that you have with them up front, set [the] expectation that ‘yes, you’re welcome to stay here, but once you’re employed, you need to start contributing financially and paying board’.

“Parents might put that money into a separate bank account, and depending on what the reason is for their child to move back home, then they might end up giving it back to them at the end.”

But it was not just twenty-somethings who were choosing to live with their family.

As the cost of living crisis bites, some retirees were even moving back in with their kids to save on household costs.

Gardian Hale and her sister are in their 40s, both were single mums with a primary school-aged child each.

They live with their 69-year-old dad in a rented six-bedroom home in Auckland.

“When you split the rent, you split the power, you pitch in for food, you pitch in for all the amenities. Everything becomes a lot more affordable and easy to achieve.

“If I was living by myself, I wouldn’t be able to afford internet, I wouldn’t be able to afford probably power some of the time, $100 a fortnight for food, for two people – me and my daughter.

“Effectively when me and my sister pool our money, we are able to have a better result at the end of the day.”

Her dad also contributed towards the rent.

“We charge him a board so that covers his water, internet, power, food and everything.

“He went from paying rent on a little house up in Dargaville, paying all for himself, to moving in with us and just paying sort of one amount.”