Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

Boomerang Kids & Money: When Adult Kids Come Back Home

However, this tough job market combined with relatively high rents means many parents will be hosting their sons and daughters once again -- for the summer or until they land an apartment, a job, a spouse or all three.

Returning home offers a great opportunity for you and your 20 year old to develop a close, adult relationship, to enjoy one another as individuals, to have fun together, to be a family once again. But it should be handled thoughtfully so it won't strain family relationships, eat into your savings or possibly delay or even damage your boomeranger's personal growth.

Living harmoniously with your child is contingent on many factors -- some you can control, some you cannot. But the one thing you can do is to let your child know he is very welcome but that he should not expect to stay forever.

                        The Old Bedroom

No matter how old your boomeranger is, he will feel like a little boy when he walks into his old room and eyeballs the artifacts of childhood on the shelves and walls. It's easy to fall back into the role of an 11-year old, even if one has a degree in molecular biology.

And you may find it equally tempting to resume your role as parent -- providing clean linens, hot meals and extra cash. But overindulgence will not help your boomeranger grow up and make his own way in life. Free housing, a credit card for a spiffy interview suit and 24/7 room service only encourage dependence and, in the long run, can be emotionally crippling.

Alternatively, you can treat the stay as you would that of any other adult border and draw up a simple contract and charge rent. But before you do...

                        Insurance Coverage

Review your insurance policies. Amending them takes time.

It's unlikely that your medical plan covers grown dependents. Most policies discontinue coverage when a dependent is no longer a full-time student or when he reaches a certain age, typically between 23 and 25. After that, an adult child may qualify to remain on the policy for a limited time under COBRA, but the premiums are likely to be very high.

Until your child gets his own employer-sponsored coverage, one option is a short-term policy. Also called temporary insurance, it is offered in renewable increments of 30, 60, 90, 120 or 180 days, making it also easy to cancel. If your child is healthy, that is if he does not have a pre-existing condition, coverage is easy to get. Many college alumni associations, in fact, are now offering plans for members.

$TIP: A good place to begin your search is with GradMed (http://www.gradmed.com/). After a $500, $1,000 or $2,500 deductible, this plan pays 80% of the next $5,000 of medical expenses and thereafter, 100% up to $1 million. (You can find out if your alumni association is a participant by using the search box on the website.)

The deductible is the amount of money you - the insured - must pay before your health insurance starts to pay for covered medical expenses. For example, having a $500 deductible means that if you submit a claim for $750 of covered medical expenses, you must pay the first $500 yourself. After that, the insurance company pays 80% of the remaining $250.

With GradMed you can go to any licensed medical doctor or hospital you choose. There is no list of health care providers that you must use. And, there are no copays.

Auto and homeowner insurance is also important. If your grad will be driving one of your cars, add his name to the policy. If he already has his own car and insurance, combining the two policies may actually be cheaper. Check with your insurance agent.

If he's hauling home expensive computers, printers, Blackberrys, iPads and CD players, you may need to boost your homeowner's insurance.

If your child has already landed a job, you may decide that he should foot the bill for any increased premiums. If you think that's too tough or too expensive, you should still let him know that the cost of coverage has gone up. Insurance is a part of the real world.

                        No Free Lunch

After adjusting your insurance, your next step should be to sit down together and work out the specifics of your arrangement. It's a good idea to put your agreement in writing -- not only will the process keep you focused on the issues at hand, it will also help avoid confusion in the future. Establishing a clear understanding of what's expected at the beginning is key to making this temporary arrangement a successful one. Among the topics you should discuss:

o Time. Agree upon how long your child can stay with you. This will encourage him to get out on his own and at the same time protect your privacy and your finances. This need not be written in stone; it's merely a guideline. Circumstances may require your child to stay longer than initially agreed upon. By setting an ending date, however, you are making it clear that he must eventually assume responsibility for his own life.

o Rent. Decide together how much your child should pay. The easiest solution is to base it on a percentage of his salary. There are circumstances, of course, when parents feel it's best not to charge for the first two or three months, especially if their child needs his income to pay off credit card debt or if he is unemployed. Eventually, however, he should a small contribution to the household, even if it's just $50 or $75 per month.

If he does not have a job, substitute yard work, painting, cleaning, babysitting, etc. in exchange for room and board.

Why not put his monthly rent in a savings account where it will earn interest and then when your boomeranger leaves home, you can surprise him with a sizable nest egg which he can use for the security deposit on a rental apartment or as a down payment on a house.

o Chores. Your adult child should do his laundry, clean his room and bathroom and share in the shopping and cooking. Perhaps he'll cook one night a week, or on the weekends. If he hates to cook or is a terrible chef, suggest that he bring home dinner from a local take-out restaurant once a week. Mowing the lawn, shoveling the snow, walking the dog and other tasks should also be shared.

o Friends & parties. Keep in mind that this is still your house. You're entitled to impose limits on smoking, drinking, sex, loud music and late night parties.

STAY TUNED: Next week: Parental No-No's