Kids starting job... living at home ... how much "rent" should they pay?

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Ger1966

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Happy New Year to everybody!

2 of my kids will be finishing college this year and will be starting work.

Following work placement, Child #1 has already been offered a job with a US multi-national company and will be starting in September. His starting salary is just over €71K.
Child #2 is in the medical field and has done placements during her course. Last summer (2021) one of the hospitals she worked in took her on for the summer, with full pay. She's hoping that she might get a permanent job in the same hospital when she finishes. She'll be expecting a salary of around €35K.

It's been a financial struggle for my wife and I to get them this far - see this thread - but it has been wort it.

As they'll be earning, they'll need to contribute towards the costs. However, I'm not sure how much we should be asking for. Is it fair to ask child #2 to be paying the same as child #1 considering the difference in salary? I know if they were renting a place of their own, the salary difference wouldn't come into it. If they are going to live at home for a while, we'd like them to contribute towards their "keep" as well as save towards getting a place of their own. I'm wondering how much other parents are getting from their kids who are in full time employment?
 
Happy New Year.

Firstly, it’s great that they’re both doing well.

There’ll be different opinions on this. My own is that they should definitely pay something, and that the higher earner should pay more.

Then there’s the question of how much and also what you do with the cash. Their ‘take homes’ will be €48,000 a year and €29,000 a year according to the Deloitte tax calculator. To put it in context, that’s basically €4,000 a month of disposable income for your son. Very few people would have that after their other commitments are taken care of.

As an aside, you should advise your son to start funding his pension to the max, i.e. 15% of €71,000 per year (I’m assuming he’s not Van Wilder). The impact of starting so young should be huge. It sounds like your daughter is joining the public sector, so she should familiarise herself with that system.

Personally, I would ask him for €1,000 a month and her for €500 a month. But I’d actually set the money aside as their own (without their knowledge) and then give it back to then when they’re buying a property. I would actively encourage them to start saving for deposits as well. There would be no tax issues; just document it in simple terms on a one pager, i.e. that it’s their money.

Living at home for €1,000 a month and sticking a net circa €500 into his pension, he should still be able to save €1,000 a month pretty easily.
 
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I would ask higher earner to pay a bit more because ultinately you parents have helped them get this far. Yes, if renting off their own ba then salary would be irrelevant but in this situation i think its a relevant factor but not overly so.

1k pm for me is too much to ask.

I would ask for a % of each of their disposabke income. Say 15%. So on 4k disposable thats 600pm.

I would hope though that they see the help that you, as parents, have given them and rather than you asking they will volunteer a fair monthly contribution. Maybe ask them what they think would be fair and go from there.

I wouldnt hold the money to give back to them to help with buying. No way Jose. Id use their contribution to pay expenses and to enjoy as part of you and your spouses disposable income.
 
Does the salary for offspring #1 include shift allowances/bonuses? If he is working shift hours, then a car will be essential. So that's an additional living cost.

Encourage him to max out any benefits such as APSS and / or Pension if available. Few of us in our early 20s thought pensions were important.

I don't think I'd want to pay 1k a month & continue to live at home!

I didn't look for money from working offspring myself, but I think I'd start the conversation with them first and then perhaps a % approach would work well.
 
Hello,

I agree with Gordon - albeit, I think I'd be asking for 35% of net take home pay from each child, rather than getting into specific numbers that may need to be renegotiated in a year's time etc. Once it's set at 35%, it's easy to recalculate, there's a level of fairness, and there's no re-negotiation

If the children remain with you long term, you might consider giving them some of the money back, to help them with a deposit for a home, in years to come - but that's solely your choice, and remember, if you do it for one, you'll have to do it for both children.

Getting both to start making personal pension contributions, once they are hitting the higher tax bracket, makes a lot of sense.

While not trying to "frog march" them out the front door, they do ultimately need to move out, and become self sufficient, so don't worry about charging them something similar to an arms length rent, or mortgage repayment.
 
I think it depends on what you mean by "living at home, if their expecting to treat the home like an all inclusive hotel and still have everything done for them like cooking, cleaning and washing then somewhere in and around 20% of their net take home
If they are looking after themselves and pulling their weight around the house and buying and cooking their own food I think somewhere around 10% of net pay would suffice in my humble opinion
While I do like Gordon's idea of squirreling away some of the rent to give back at a later date it might cause a small problem if one child is given more than the other or you feel under pressure to give the second child the same amount as the first child
 
For what it’s worth, my parents didn’t take any money from us, but my Dad has since told me that they think it was the wrong approach.

Running a household costs money; it just doesn’t make sense to have a grown adult pulling in €71,000 a year and not ponying up a material amount of cash.
 
Cervelo said:
I think it depends on what you mean by "living at home, if their expecting to treat the home like an all inclusive hotel and still have everything done for them like cooking, cleaning and washing then somewhere in and around 20% of their net take home
If they are looking after themselves and pulling their weight around the house and buying and cooking their own food I think somewhere around 10% of net pay would suffice in my humble opinion
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At those rates, you'll have half of the members of AskAboutMoney looking to move in with you! ;)
 
Ask each of them what they think is fair to contribute. At the end if the day, they are yr children. I'd be more inclined if they were paying into a pension or saving to put towards a deposit then bully fir them and help them along the way.

A contribution to food, utilities, heating, broadband etc no problem, but I wouldn't be one for charging rent tbh. Unless they were pissing their wages away.
 
I would be inclined to the 35% of take home pay. While it is wonderful for adult children to live at home with very little responsibility in terms of food, cleaning, washing, utilities etc., there is a significant impact on the household.

I would use the money to:
Do household improvements, all that wear and tear from the 20 odd years of kids, breakages, making do, buying low quality because that was all you could afford.
Improve the quality of food in the groceries.
Get the more luxurious shampoos, soaps etc.
Leave the heating on for longer than normal.
All those jobs you have been putting off for years because you were shelling out money for extras and education for the kids.

Spending this way improves the lives of all in the household. If you still have a mortgage pay it off faster.

And it focused the mind of the adult kid - do they want to continue to live at home or move out to spend their money as they wish. My adult kids are either still in education or living out of home so this is all theoretical on my side. I might think differently when it actually happens. But I did have a friend who paid 50 % of take home pay to live at home.
 
As an aside, you should advise your son to start funding his pension to the max, i.e. 15% of €71,000 per year (I’m assuming he’s not Van Wilder). The impact of starting so young should be huge.
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Thanks Gordon. I've spoken to him about AVC's and that's something that sparked an interest in him.

I should have also said that he gets a "signing bonus" of €12K spread over 2 years. He gets €6K in his first pay (as well as his monthly salary), and the remaining €6K is paid monthly from month 13 to month 24. I explained to him that if he made an AVC of the €6K "signing bonus" that he'd get ~50% tax relief on this. However, he pointed out to me that as he'll only be paying tax for 4 months (he'll be starting after the August pay run, so his first salary payment will be towards the end of September, he'll "only" be paying 20% tax, for the full year, so he's questioning the benefit of making this AVC. Any tips on how to persuade him to make this AVC anyway even if he only gets the 20% benefit? From month 13 onwards though, he is going to make a monthly AVC of €500 for the second part of the payment.
 
Does the salary for offspring #1 include shift allowances/bonuses? If he is working shift hours, then a car will be essential. So that's an additional living cost.
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@Thirsty no, that's the "basic" salary. There are annual performance reviews and stock awards, so he could earn some more.

He will need to drive to the office and use the toll bridge (he drove that for 3 months during the summer), so he's aware of daily toll charges as well as petrol. It's amazing how fast people notice these costs when they're coming out their own pockets rather than Mum and Dad's bank account;)

He has an old car and is using this so petrol cost him a lot during the summer. When he saw what he was being offered, he started to talk about a new electric car... probably a Tesla:eek:. I ran through the monthly repayments with him, so I think a Tesla is off the agenda!
 
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Get him to pay for a charging point at your house (there's possibly a grant towards this cost), if he's looking to get an electric car - and then, enjoy the discussion as to what apportionment of the electricity bill he's going to pay.

Also, are there any tax benefits to having the kids "gift" their parents money, each year?
 
Clamball said:
I would be inclined to the 35% of take home pay. While it is wonderful for adult children to live at home with very little responsibility in terms of food, cleaning, washing, utilities etc., there is a significant impact on the household.

I would use the money to:
Do household improvements, all that wear and tear from the 20 odd years of kids, breakages, making do, buying low quality because that was all you could afford.
Improve the quality of food in the groceries.
Get the more luxurious shampoos, soaps etc.
Leave the heating on for longer than normal.
All those jobs you have been putting off for years because you were shelling out money for extras and education for the kids.

Spending this way improves the lives of all in the household. If you still have a mortgage pay it off faster.

And it focused the mind of the adult kid - do they want to continue to live at home or move out to spend their money as they wish. My adult kids are either still in education or living out of home so this is all theoretical on my side. I might think differently when it actually happens. But I did have a friend who paid 50 % of take home pay to live at home.
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Agree totally @Clamball It'd be nice to have a bit of extra cash to do what you've called out above.
 
I would be of the opinion of: spend a third, save a third, hand a third up. Then up to the parent whether part of this is squirrelled away and perhaps handed back when buying a home etc. But I think it’s very important to take a decent chunk while also instilling the importance of saving
 
A covenant might be of use here.

Kids can gift up to 5% of their income to parents and it can work well where the child is a higher rate taxpayer and the parent isn’t.
 
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