Charging our kids rent dilemma
I stumbled upon a Reddit thread the other week which got me thinking:
Should we charge our children rent?
As financial independence seekers, it would seem obvious to charge our children rent. It might seem like a ruthless side-hustle, but hear me out here.
I set up an impromptu 24 hour twitter poll which reached 2,875 people and 91 people voted.
Read a thread on reddit about parents kicking their children out at 18 to save money or charge rent whilst they are still in high school.
Is this a cultural thing or a socio economic thing?
As FI seekers, do you charge your kids rent? If so, why?
No judgement. Curious.
— Cashflow Cop (@CashflowCop) May 12, 2019
I expected this to be divisive, but turns out not as much as I thought.
As I mentioned in my tweet, there are perhaps cultural and socio-economic factors to consider but I won’t be going into those here.
I’m going to be purely looking at this from the FIRE lens.
I will also assume that we will not need the income from charging our kids rent.
What I will say though is: there are families out there who are in some really bad financial situations. As soon as their children turn 18, they see their parental responsibility to provide as over and charge them rent. Sometimes charging them rent even whilst they are still in school.
This article makes no judgement.
In this post, I am talking about anytime from the age of 14 (the legal age to work in many countries). So this isn’t just about adults, but includes children. Just not too young though…
If I had kids, I would shake down their diapers for coins…
See AlsoChoosing Your Health Insurance: A Guide For Open Enrollment | ChooseFIBlog — Sisters for Financial IndependenceBlog — Sisters for Financial IndependenceWeek-off Recap and FI Goals for November - Dividend Income Investor— Lisa (@alawyerhermoney) May 12, 2019
(To be clear, Lisa is joking) – apparently she wasn’t joking 🙂
This is more of a thinking out-loud type of post. I will wear two hats and attempt to argue for each opposing side before concluding with what we will likely end up doing with our own children.
Lets keep it simple
Before I begin, I thought about keeping things simple and not to overthink this.
The chart below illustrates how I could decide on the right moment to charge our kids rent.
What we could do is plot as our our children age how annoying they are and how much income they earn. The point at which their income reaches how annoying they are is when we should begin to charge them rent.
‘Simples’ right?
Maybe I should stop here and end the post.
In all seriousness, let me put a bit more thought into this…
Why I’ll charge my kids rent
Responsibilitywas cited a number of times as a key reason to charge children rent. Making them financially responsible for having a roof over their heads, even if it were only a token amount will force them to grow up and understand that life is not a free ride.
From the age of 14, many kids can start to earn money. They might even get pocket money. So charging them a fraction of this could teach them to be responsible.
I’ve seen far too many times, especially in my work how spoilt children can end up relying on their parents for life, or worse on the wrong side of the law. Charging them rent early on will slowly teach them to be responsible for themselves rather than wait until they are 18 and expect them to change with a flip of a switch.
The amount of rent charged could increase based on their age and how much money they get through work or pocket money.
Financial skillslike budgeting, self-discipline and frugality might be developed if they know that at the end of the month, mum and dad want their rent. Of course, I will be there to teach and guide them. However, instead of something abstract and theoretical, the fact that they need to pay rent provides something tangible for them to understand and learn.
Extra moneyis aways welcome, especially for a family on a below median household income with other costs like childcare to contend with. Even if the family does not need the money, is it only fair that a teenager starts contributing financially?
This is where people start to have strong opinions.
Imagine my 16 year old kid starting his first proper part time job. He makes £500 per month tax free working in retail or hospitality over the weekends. Despite my efforts, he spends all his money on fancy footwear, clothes and games.
He saves nothing.
His studies are okay, but could be better if he focused more on school and less on working.
Come Mondays, he is now tired and starts to fall asleep during lessons.
Surely it is morally acceptable for me to charge my son a small amount for rent? Maybe it will make him value money more. Perhaps it will cause him to work a little less and focus on his studies instead.
We have another child so the extra money we collect from him could help towards school tuition for both of them. It could also be saved to go towards their first home or university fees.
Emotional strength is another reason I’ve come across for charging our kids rent. There is something to be said about ‘tough love’. To place them outside of their comfort zone. Add a bit of healthy stress in their lives to not only financially but mentally prepare themselves for the real world.
Gaining independence and confidencebecause our kids are learning and developing all of the above points early on in life. If we were to give them a free pass to live rent free with us for the rest of their lives, where is their motivation to grow-up and to be independent adults who add value to society?
Why I won’t charge my kids rent
Education is an important part of our family. I grew up where our parents kept reminding us of this and how we should not waste the educational opportunities that are available in this country.
By charging our kids rent, it will act as a distraction to their studies. They may grow to love the idea of earning money more so than studying. This may be the spark which causes them to drop out of school. At this age, we would want studying to be a priority over earning money.
Their childhoodshould be maintained. Even at 14 years old, I worry that by charging them rent, no matter how small, I will be robbing them of the last remaining childhood years to be care-free.
Do I really want my 14 year-old child to worry about paying us rent? Despite how light-hearted, educational and fun I make it, some kids are natural worriers. I might be forcing them to grow up before they are ready to.
Resentmentcan build up within their minds. When they compare themselves against their peers, they might be wondering, why are my own parents charging me rent?
This feeling could be minimised by taking the time to explain to them, but doubt can creep back in. Kids can be easily influenced at that age.
Our relationshipcould change. Everything we do as family ends up having a monetary value attached to it. If we wanted them to help out around the house above the usual, how would I react if they turned around and said: “can I have a reduction in rent this month please?”.
If I wanted them to look after their younger sibling for the evening, they could demand payment for doing so.
This change in mind-set and the relationship between parents and children could be very difficult to reverse.
Love and support is the most important consideration for us. I guess all the above points could be grouped together under this heading.
Would charging them rent make our kids feel like we love them less?
Would it go against the idea of being supportive parents?
It could be argued that all of the positive points of charging them rent are in themselves proof that we love and support them. It’s just done in a different way, but I need to accept the risk of how our relationship with our kids could change.
Why I’ll just kick my kids out
There is also another, more ruthless option.
Just kick our kids out.
I am talking here about once they are done with their education and are adults.
If they know there will always be a free place for them to stay, they might become less motivated individuals. Believing that after a certain point in their lives, mum and dad will charge them rent if they want to flee back to the roost will make them think twice about taking the foot off the gas in making a life for themselves.
What will I do?
The little thought experiment above was fun to do. Forcing myself to view this from different perspectives even if I didn’t believe in them. It has really helped me to decide what might be best for us.
It’s important to remember that every parent, just as every child is different. I am not sure there is a right or wrong in all this. The key thing is the motivations behind the decision.
Are we acting in our children’s best interest when we charge or not charge them rent?
I think that’s the main question we will ask ourselves when it is our time to decide.
Growing up, my parents did not charge us any rent. Even when my younger brother moved back home after studying and his girlfriend at the time joined him, they still didn’t charge them rent. My brother and his girlfriend contributed towards household bills, but they chose to do that. They didn’t have to.
Also, there was no such thing as payment for doing housework when I grew up. We either helped out as asked or get a telling off (sometimes punished) if we didn’t.
I didn’t get pocket money until I reached secondary school (11 years old). I would get £0.50 per school day from my parents to help top-up our free school meals (we were classed as low-income), grab a snack at the tuck shop or get a bag of chips on the way home. Later, my parents increased this to £1 and then eventually to about £2.50 (includes my bus fare).
My experience growing up has shaped my views to where I am leaning more towards notcharging our kids rent.
I particularly like this idea:
But I also like the idea of collecting rent, so they learn the responsibility and costs of being an adult, but saving that up for them to help them when they leave the nest. That way they can leave with an Emergency Fund already in place, or start investing in their retirement
— Josh Overmyer (@Jovermyer1) May 12, 2019
So this is what I think we will end up doing:
- As long as they are in full-time education, we will not charge them rent (yup, this includes PhD if that is what they choose to do).
- Once they finish their studies and need a place to stay, they will always be welcome to stay with us rent-free so long as they are actively looking for work.
- As soon as they find a job, they can still stay with us to help them save and find their feet. However, they will contribute towards household expenses, including rent.
- Again, we will keep this money separate and invest it for them. We will gift this back to them as and when we feel the time is right.
This feels like the right balance to us.
My aim with my children is through watching us and listening to everything that we will try to teach them, they will become financially literate. More so than I was when I was a teenager.
I hope that they would want to save and invest from the very first pay cheque.
The risk of damaging our relationship by adding an extra layer of precaution in the form of charging them rent (and investing it for them) is more than we are able to accept.
I’d like to give them the freedom to grow up knowing that as parents, we have brought them up to be the best they can be. We will be there to support them and trust them to pick out our best traits as their forge their own way in life.
My eldest is still only two, so I’ve got some more time to think about this.
So over to you:
What do you think about this?
What was your experience growing up?
More from the Blog
Investing for Our Children: Will it Ruin or Motivate Them?
My Property Investment Journey – Part 1: Making £100k with Lodgers
FI is NOT about Perfection: Financial Slip-Ups Are Okay!
