What is... | July 7, 2014

What is the boomerang generation?

Imagine the freedom of leaving home, graduating and starting work only to be thwarted by high rent and hefty bills. There may only be a little money left for essential items, and worse still, nothing spare for any fun. The only option might be to move back in with your parents.

These grown up children are known as “boomerangers” – named after the Australian throwing device that returns to where it came from. Figures suggest the number of boomerangers have been on the rise – hence the term the “boomerang generation”. With studies showing there are upsides (as well as downsides) for both parties, returning home may be seen as a financially savvy move and not hold the social stigma it once did.

Hi dad, I’m home
Children have returned to live at the family home when conditions got tough for generations but the number appears to have risen in many countries over the last decade. According to figures from the Office for National Statistics, more than 3.3 million 20–to-34-year-olds in the United Kingdom were living with their parents in 2013 – or 26% of that age group.
The global financial crisis that started in 2007 is likely to be a contributory factor to the rise in the number of boomerangers around the world. High rates of unemployment, particularly in Greece, Spain and Croatia (as figures from Eurostat show) and rising house prices (as International Monetary Fund research shows) make conditions difficult as well.
An article in the Financial Times in May 2014 claims that “young Spaniards’ lives have been put on hold” as ”youth unemployment stands at 55% - and almost half of under-30s still live with their parents”.

Happily ever after?
Although it might not spring to mind, moving back home can have benefits for adult children (not least somewhere familiar to live), but also for their parents as well. A special report from Pew Research in the United States in 2012 found, for example, that 48% of boomerang children paid rent to their parents and 89% helped with household expenses.
Moreover, about a quarter of boomerang children Pew surveyed thought their relationship with their parents had improved as a result of living with them later in life. Research from Australia also suggests that parents and children who moved back together tended to get on well with each other and parents recognised that the children’s return was “the most sensible option”.
Although some may not consider returning ideal, it may make good financial sense and could be emotionally satisfying.

Across the globe
In Europe, our own 2012 ING International Survey on Homes and Mortgages found moving back home was more prevalent in Turkey, Romania, Italy and Spain and less so in Belgium, Austria and Germany.
Cultural and financial aspects may play a role in the apparent increase in inter-generational living too. Eurostat records significant differences between countries in how families live. For example, the study found that in Denmark and Sweden, half of all young men have left home by age 21, in contrast to Greece, Slovenia and Bulgaria, where half the men still live with their parents beyond age 31.

Spare a thought
While the boomerang generation has positives, there can inevitably be downsides too.
It might be that when children moved out the first time, the family moved to a smaller home, only to find themselves upsizing to accommodate adult children.
This could have ramifications for retirement provision and putting long-term savings plans in jeopardy.
One parent told BBC Radio 4 how he and his wife “ran away” from home to escape their adult children, who had returned and taken over the family home. He says how the return to the “snarling teenager” and “cross parent” dynamic was simply too much to bear.

Be prepared
Most families will have some warning that a relative is approaching financial trouble and may want to live with them again.
At this point, it could be a good idea to be prepared for the extra food and energy bills that will naturally result, particularly if money is a little tight.
It might be a good idea to start a budget to cope with the extra cost.
This may help have a positive experience and enjoy the extra time you get to spend with your loved ones, rather than stressing over money matters.

SavingPersonal financeFamily

eZonomics team
.(JavaScript must be enabled to view this email address)