How to Budget for Your New Empty Nest

When that last child leaves home, the entire household dynamic changes, even if that child spent much of the last few years away from home: going to school, working, or socializing. Once they really move out, life is different. Generally, pressure on the household budget eases up because there are fewer people living in the house using water and electricity, and fewer parental obligations like paying for school field trips, club dues, and other school-related expenses. But learning how to budget for an empty nest can be more complicated than a lot of people realize.

The Ideal Situation

In an ideal world, the last child would leave for college (paid for by some combination of scholarships, grants, loans or healthy college savings) or for full-time employment, and parents would suddenly have a lot more disposable income. This is an enviable situation in 2014, but some parents in this situation may get the idea that they don't need to know how to budget anymore.

However, even under these idealized conditions, empty nesters need to evaluate whether their new, more financially free lifestyle is sustainable. Depending on how close they are to retirement, they may need to shift some of the money that had been used for raising children into retirement accounts so they can enjoy a comfortable retirement.

When Adult Children Need Financial Help

It's a fact of life that many adult children still need some degree of financial help. Twenty percent of parents over 50 have at least one grown child who has moved back home, and two-thirds of over-50 parents have given their adult children money within the past five years. Most of these parents don't know how to budget for helping out adult children, because it's a subject that's not talked about much, and a life situation many people are not prepared for.

Next step: Sign up for Mint and learn how to budget so your income goes further.

If your adult kids have moved back in, you have to assess what you're spending to help them. You also need to be certain that they are taking the necessary steps to better themselves so they can be fully independent as soon as is practical. Tools like Mint can help you add custom line items to your budget, so you can be aware of how much you're spending on "boomerang" kids and keep these costs under control.

When Empty Nesters Must Help Aging Parents

Another common fact of life for parents of grown children is taking care of aging relatives. Aging parents may have little to no earning potential, and they may have expensive health care needs. If your children are grown and your parents or other aging relatives need your help, it makes sense to focus more on helping the older generation, since their means for helping themselves are more limited. By contrast, your adult children should know what your limits are on helping them, assuming they have the ability to become or remain independent. Often, being an empty nester means learning how to budget for the care of aging relatives and occasionally helping adult children.

Making the Most of Your Empty Nest Budget

When the last child moves out, it can be cause for celebration, but it's not cause for abandoning your budget. Sure, raising children is one of the most expensive things people do over a lifetime, but once kids leave home, there are still plenty of demands on your income, and it's critical to continue to budget to make the most of it.

Let adult kids know how much you're willing to help, and what you expect in return for it, including rent should they move back home. It's particularly important for adult kids to know your limits if there is the possibility that you'll have to start helping aging relatives at some point. Your kids' earning potential should be growing, while the earning potential of the older generation may be dwindling rapidly.

One of the best ways to learn how to budget regardless of your life situation is to use powerful, free budget apps like Mint. With Mint you can track spending, create budget line items, set and track financial goals, and track investments. These practices are beneficial at every stage of life, from young adulthood through retirement.

Next step: Sign up for Mint and learn how to budget so your income goes further.