Financially Speaking->How much will it help my son/daughter (who just graduated Highschool) by making them Get a Job and Paying me Half their income and keeping it Saved Up until their Ready to Move Out and Get a House?

16 comments

  1. A lot actually, I’ve heard of a few people doing this. It’s way better than just threatening them to get out, while also incentivising them to work

  2. I’m not sure why you deleted the first post and reposted the same question but I’ll answer again.

    Presumably your children are over 18?

    You can reasonably ask them to pay you rent, although you should have a conversation with them about it first so it’s not an unpleasant surprise. But as adults, they probably should get used to paying rent.

    If you choose, you could put their rent payments into a savings account and then give the money back to them at some future date. It’s not clear that it would help that much in buying a house unless they live with you for many years, but some savings is better than no savings.

    You can definitely also have an actual conversation with them about good spending habits, saving, etc. Indeed, you probably should do this if you haven’t already. Starting a “secret” savings account is sort of unnecessary but you can certainly do it.

    If you handle this well – e.g. just make it about paying rent, which is a good idea anyway, and then give them money back later – I highly doubt you will be endangering your relationship with your kids, as everybody suggested in the first post. But ultimately you should do them the favor of explicitly teaching them how to deal with money themselves.

  3. Unless they have something valuable they are actually responsibly saving for(college, car they need, their own apartment to rent), I think it’s fine to charge them rent and then use it towards a house whenever they move out. Probably better than just letting them do whatever with it.

  5. Well, I don’t know if they’ll be too happy about it at first. Specially it being mandatory.

    But, I will say when I was 20 I had to live with my grandparents for like 7 months while I saved up money to get a small apartment. I insisted on paying my fair share. They refused and refused at first, but eventually agreed to let me give them only $150 a month. “Not a cent more” they said “save your money for your own place”.

    When I signed the 6 month lease on my apartment, paid the deposit, first months rent, the deposits and setup for water/electric/internet, and getting a second hand fridge, I was broke. I had like $75 to make it until my next payday.

    When I got the last of my stuff out of my grandparents house my mawmaw handed me an envelope with all the money I had given them. It saved my ass big time. I was always super grateful for that.

  6. You can definitely also have an actual conversation with them about good spending habits, saving, etc. Indeed, you probably should do this if you haven’t already. Starting a “secret” savings account is sort of unnecessary but you can certainly do it.

  7. This isn’t really an answerable question. Can he/she afford to give you 50% of their income? Are you planning or even know how to be a good steward of the money? Will you invest it? Will it be in their name? What happens if you die unexpectedly? In general, I don’t trust anyone to save money for another person.

  8. I think we’re skipping over some vital information. Are they enrolled in post-high school education such as an apprenticeship, trade school, community college, or traditional college/university?

  9. Not a bad idea, but I’d have him or her start a low fee brokerage account in their own names with auto investments. Vanguard does some good ones.

  10. So, I’m not sure what their pay is gonna be or what rent is where you are. However, I’m inclined to say that this would hurt them more than help them. I don’t know if what you’re doing is in good faith or a malicious way to keep control over them (could be either), but think about this: it’s recommended that you don’t pay more than 30% of your gross pay on rent. So right out of the gate, you’re hindering their financial futures (unless they are absolutely horrendous at money management).

    When you have income, you have priorities:

    While you shouldn’t be paying more than 30% of your income on rent, some people do due to unfortunate circumstances or living above their means. They should be focusing on investing in their futures.

    What exactly does that mean? Well if their employers provide a 401k, 403b, or equivalent, they should be maxing out their employer match at minimum (ideally more). Compound interest baby. If they’re able to max that out while living with you, then that should be your priority rather than you slashing half their paychecks and (presumably) putting the money in a standard savings account. HYSA are back over 4% across the board now, and that’s *still* not quite keeping up with current inflation rates (although it is keeping up with the historic inflation rate). A bigger bank might give 0.1% in a standard savings. So not only are you slashing their pay, but you’re effectively devaluing the money that you are taking from them.

    Now, if they’re more savvy about investing, you might want to look into IRAs. Going Traditional vs Roth doesn’t generally matter (I’m expecting some angry people to comment on that and I won’t be responding to those) for a 401k. However, if you do an IRA, do a Roth because it gives you better leniency on future loans. The idea there is that it’s better to owe money to yourself rather than a bank. You can also try the stock market.

    So generally speaking, unless you know what you’re doing in growing money, it’s better to work with them and try to get their heads on right to build a financial plan. You can even get an expert to help. It’ll be worth the pay in the long-run. I only became financially literate after I blew through my cash and had to take a loan out for debt. They say experience is the best teacher, but in terms of money, it’s best to learn before you hit dire straits.

  11. So I don’t know what kind of job your kid will get or where you live in the US but saving up enough money to put a down payment on a house could take a long time. Also at the moment house prices are high and we don’t know how long they will be this high. Maybe by the time your kid has enough for the down payment the bubble will have burst and they can get a good deal but also it might be worse.

    Generally speaking it is better to pay a mortgage rather than rent but if this will be your kids first time out in the world they may not have the life experience to take care of a house properly as it is a big responsibility. I just don’t have enough info to tell you if it’s a good idea

  15. Unless that money is going into an actual saving/investment account like a 401K or savings account then this is a bad idea.

  16. Let them f up and blow dumb money while they have a safety net. If they learn to expect a “secret” piggy bank fro you – you may never escape.

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