Are you wondering how much rent to charge your kids once they start working? Some parents are reluctant to charge their adult children any rent at all, and some kids feel that it's their parents' obligation to keep providing them with free accommodation even once they start working. But if you don't charge them a reasonable amount, you won't teach them some valuable life lessons. So how much should they pay? Here are some tips to help you decide how much rent to charge your kids …
1. What do They Earn?
A good place to start when working out how much rent to charge your kids is by looking at their take-home pay. If they don't earn very much, it's probably not fair to charge them market rent. Many people choose instead to charge their offspring a certain percentage of their take-home pay, which can be a good option if they're only working part-time.
2. Extra Costs
You should also take into account the money that your child is costing you, such as energy, water and food, especially if they have the usual youthful tendencies to leave lights on and take long showers. Bills are not cheap these days! Also consider if you'll be doing their laundry and cooking their meals.
3. Savings Account?
Some parents charge their children rent in order to teach them fiscal responsibility, but secretly stash the money in a savings account. Their idea is to later gift the money for a house deposit. If you decide to do this, it would certainly be a lovely surprise for your children (but do make sure that they don't blow the cash on something else!).
4. Frivolous Spending
When they get their first job, young people often feel rich - and start spending madly. As far as they are concerned, it's all fun money. If your child is the type to do this, you should make sure that you get your cut first; you could take a percentage so that they still have enough for frivolous spending but not at your expense.
5. Market Rent
You probably won't want to charge your kids the market rent in your area, but it can be a good starting point to work out how much you want to charge them. You could choose to charge them a certain percentage of the typical rents, or 'discount' it by a certain amount.
6. What is Included
Also consider what will be included in the rent and what they will be using. Will they be spending a lot of time out of the house? Will they cook their own meals and buy their own food? And does their girl/boyfriend stay over a lot?
7. Do You Need the Money
You may want to help support your adult children financially, but economics may dictate otherwise. If you don't have the income to keep subsidising them, then it's fair to charge a reasonable rent, depending on how much they earn.
If your kids complain that you're charging too much, simply check the prices of similar rooms in shared houses - which are bound to be a lot higher - and point out that they're free to move out if they prefer. They will soon realise that you're offering a pretty good deal! What did your parents charge you when you started working?