The Moneyist: My frugal 31-year-old daughter is living at home while she pays off her student loan — isn’t that the equivalent of a $2,500 monthly gift?

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Dear Moneyist,

Our delightful and frugal 31-year-old daughter is living at our home for free while paying down her graduate-school student loan. I told her that as far as her siblings and parents are concerned, that is a cash equivalent of about a $2,500-a-month gift. She disagreed, given that no cash is changing hands. Who is right?

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My husband and I own a business and have a net worth of several million dollars. We have emphasized equal distribution of our assets in our wills. Our children have had access to and been fully informed in meetings with our attorney. But we have recently given $25,000 to our oldest to help him buy a house. Now, things are not equal.

For that reason, I suggested to our daughter that her living arrangements are a gift. My three children’s continuing positive relationships with one another are of the highest priority, and they are aware of that also. She did seem to agree with my opinion of the value of her living arrangement, but not that it’s the equivalent of a cash gift.


Dear Margaret,

Thanks for your letter. It’s short and — well, I’m not sure if it’s all that sweet. Either way, we live by our actions and you’re doing a good thing by giving your daughter the time and space to pay off her student debt while living in the relative comforts of home. I’m assuming you live in New York or some other major city where rents and living costs are high, so I have no doubt your daughter appreciates it.

A recent Merrill Lynch survey said 79% of parents are providing financial support for their adult children aged 18 to 34 and, in a study released by the Pew Research Center last month, the majority of Americans (64%) said they believed parents were doing too much for their young adult children. However, less than a quarter of young adults are financially independent by age 22, compared to 32% in 1980.

“High-income parents are more likely than those in lower income groups to say the financial help they gave was related to education,” the study added. “Two-thirds of parents in households earning $100,000 or more a year say the support they gave their adult children was tied to educational expenses, compared with 53% of parents with incomes between $75,000 and $99,999, and fewer than half of those earning less than $75,000.”

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To answer your question: It doesn’t hurt to make sure your daughter is aware that she’s saving money by living with you — and, perhaps, you would like your own independence at some point. No doubt she appreciates the arrangement every time she pays off a chunk of her student loan. I’m with your daughter, however. I don’t believe this is the equivalent of a monetary gift, even if she is saving $2,500 a month in rent.

When you offered your daughter the opportunity to move back to her childhood home after college, I’m sure it was a gesture of goodwill. While she’s saving money on rent that she would otherwise pay, it’s too transactional — for me — to calculate each month as a monetary gift and then deduct it from her inheritance. Otherwise, she’s not really saving money by living with you — she’s really just buying time.

I’m not saying such conversations aren’t worthwhile. It’s healthy to air your thoughts and process them with your daughter and husband. But the real gift here is from you to your daughter, and it doesn’t have a price tag. You welcomed her home with an open door and an open heart, and I’m sure that she will learn from your generosity and do the same for her own children if they ever need similar help.

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Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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