It's the question most parents ask themselves at some point: Should I charge my adult working children board or allow them to live at home free so they can accumulate savings?
Cassandra Fitzpatrick, a Sydney mother of three children aged 22 to 26, started charging board when her children got full-time jobs.
"All three have always been taught that it's a given to contribute to the home. There was no pocket money for chores. Chores were a part of family life and so was contributing to the costs of living, such as board. They pay for their toiletries. If they go to the shops and buy milk or bread, they never expected the money," she says.
Fitzpatrick says she doesn't need her children to pay board for financial reasons, it's about teaching them principles to live by.
"As young adults able to vote and have a drink, becoming responsible for themselves is a reality better [learned] soon than later," she says.
Cassandra's son, 22-year-old Marcus, says paying board has made him more responsible when dealing with his funds and knowing how to budget his money.
"I have been on four overseas [trips] without my parents, all of which I paid for. I pay for my own car, phone, internet, laptop and much more. I know people my age who have only recently started working and their parents still buy them most of the items they own and consistently hand out money. It's not that my parents are being stingy or tight asses, it's them making me responsible and getting me ready for adulthood," Marcus says.
Child and adolescent psychologist Dr Michael Carr-Gregg believes if young adults are studying or doing an apprenticeship, it is counterproductive to make them pay board as most students have little or no money. It isn't until they are working properly and still living at home that they should start contributing something, he says.
Dr Carr-Gregg says there are two schools of thought with board income.
"Some parents use it to subsidise costs [which is] justifiable given the rising cost of living these days. Some choose to save the board money as forced savings for their child to get into the housing market, usually without their knowledge," he says.
"If they are still in school, I think that's a bit rough. When they have finished studying and are earning is the best time to start. Once they start in the workforce, my view is that parents should ask for 10 per cent of their take-home pay each week."
He says charging your children board helps prepare them for the real world.
"If they are getting free accommodation then they are living in a bit of an artificial reality because that's not how the world works," he says.
"I think you've got to give them the right incentive to do something positive with their money rather than relying on parental support. Everyone needs to take responsibility for their own financial affairs."
Sydney university student Ariana Norton doesn't pay board yet, but says her parents will expect her to start once she is working full-time and earning a steady income. The 21-year-old helps around the house with cleaning, dishes and the occasional meal prep. Her parents pay for the necessities, but everything else comes out of her own pocket.
"I think there's a certain point where kids living at home should contribute financially to the cost of their own living, especially if they work full-time, but only then, otherwise I think it does negatively change the dynamic of family relationships. I think it can cause difference if it happens too early," Norton says.
Twenty-one-year-old Chantelle Mpofu lives at her family home in Melbourne and doesn't pay board. She didn't know paying board was a thing until she read about it on a Facebook page. The idea of paying to live at home had never been raised by her parents and they were just as surprised about the concept as she was.
"I don't have to pay money to contribute to the household. I have my own bathroom and obviously it's expected that I keep my own space clean. Sometimes I feel like trying out a new recipe I've found and that's always a pleasant surprise in my house. I do help out around the house, and I am happy to because it is my house as well," she says.
Mpofu says not paying board has "absolutely benefited" her.
"My mother has always said she doesn't care what I do with my money as long as I'm putting something into my savings account weekly. She and I have a joint account that neither of us can take money out of without the other's signature and I have a direct deposit into it from when I get paid from work each week. I'm lucky enough that my parents don't need my money. They're setting me up for my future and I appreciate this so much," Mpofu says.
When deciding how much board to charge, Dr Carr-Gregg says parents may like to take the following things into consideration:
- Your adult child's employment status and the size of their pay packet;
- Your own financial situation - in some households, a bit of board can make all the difference;
- How much the child assists with household chores (the lazier they are, the more you can charge);
- How much of a drain they place on household resources (long, hot showers, leaving the air conditioning on all the time);
- How much it would cost them to live in a share house with the same benefits they receive at home;
- How often they have friends over (meaning extra mouths to feed).
He says the best way to teach your children effective financial habits from a young age is to have three jars - one to spend, one to save and one to give to charity.
"Whatever you choose to do with the money you receive from your boarder, you need to ensure they pay it every week or fortnight without fail. This will reinforce the importance of paying your bills and rent/mortgage first and then luxuries after, setting them up for good habits when they leave the nest," he says.
Certified financial planner Tony Sandercock says the best ways to teach your children positive financial habits are to:
1. Set a good example. Are you always pulling out your credit card?
2. Give them responsibility. Challenge them to find a better internet deal, and give them some incentive to do it, such as a percentage of what they can save. You can do the same with mobile phone and energy suppliers. These are real life lessons that will stick.
3. Explain how a loan works. Going through your loan statements with your kids is another brilliant opportunity for financial education.
4. Encourage them to find a job and help them do it. Kids need to understand that money doesn't grow on trees. It teaches them responsibility, teamwork and even how to read an employment contract or understand how superannuation works.
5. Demonstrate that pocket money is not an allowance. Pay them for the work they do around the house. This helps them understand that money is earned and not given away, and of course, that means that if jobs don't get done, there's a consequence - no money!
6. Keep track. If your kids don't measure what money is going where, they don't have control over their situation. Make it fun! There are some excellent apps that help track spending and saving, such as one you can download for free from the government's Moneysmart website.
7. Set a savings goal. Show how putting aside small amounts regularly will grow into something worthwhile.
8. Help them understand opportunity cost. That's just another way of saying, 'If you want this video game, you won't have the money to buy that new dress'. Your kids should be able to weigh up the pros and cons of financial decisions and realise that each decision has a consequence.
9. Give them responsibility of their own bank account. This takes money management to the next level and it will prepare them for managing a healthy account balance when they get older.
10. Explain the dangers of credit cards. Credit cards are just too easy to flip out. Don't let them become another credit card victim.
When it comes to determining exactly how much board to charge your children, Sandercock says there are a couple of different approaches - charge a percentage of what they earn (20-25 per cent is common), or charge a percentage of the costs (work out the costs for food, power, transport and housing and charge a percentage of that).