They’re back

Even before graduation ceremonies commence across the country, parents who had hoped their adult children would go to college so they could get a better-paying job and set up their own households are realizing a hard truth: Their kids can’t afford to live on their own, so they are returning home.

Recent statistics from the Census Bureau show that the recession reduced the rate at which Americans set up new homes or apartments by at least half, reports The Washington Post’s Michael A. Fletcher.

In addition to the Census Bureau findings, a recent Pew survey found that 29 percent of parents with adult children report having a child who has moved back in over the past few years.

Robert Denk, assistant vice president of forecasting and analysis at the National Association of Home Builders, said the biggest driver of household formation is a young adult moving out on his or her own.

“This has to happen,” Denk said. “You can postpone moving out of your parents’ basement. You can postpone leaving your group house situation. You can postpone proposing to your sweetheart. But you can do these things for only so long.”

So, how do you make the transition from living at home to on your own?

Amanda Lily, online producer for Kiplinger.com, recently offered advice to young adults on how they can establish financial independence when they are still getting help from their parents (Parents, I suggest you send this to your kid if he or she is planning to move back home):

-- Create a financial support plan. Before accepting money from your parents, go over your finances, create a budget and then negotiate with your parents about how much they can afford to supplement your budget. “If you can evaluate your financial situation accurately, your parents will see how responsible you are and may feel more comfortable providing you with the financial assistance you need,” Lily wrote.

I’d like to add something to her advice for parents: Don’t blindly give money without knowing the details of your kid’s financial life. Ask to see a budget. Ask to see information about their pay. If they balk, simply point out that people receiving financial assistance should be transparent about their finances. If they don’t want to give you the information, don’t give them any money.

-- Set goals. You might be living at home or accepting financial assistance from your parents to pay down debt. If so, come up with a timetable for when you plan to pay down or pay off the debt. Share the goals with your parents. This creates accountability for both sides. My advice to parents, periodically check up on the timetable. Ask for proof that debt is indeed being paid down.

-- Stop taking money. If you pay off a bill sooner than you plan, let your parents know so the spigot can be turned off. The point is to become as independent as you can as soon as possible.

This week’s Color of Money question: What do you think of the trend of young adults returning home to live with or live off their parents? Send your responses to colorofmoney@washpost.com. Be sure to include your full name, city and state and put “They’re Back” in the subject line