While I have no statistical data to back this, anecdotal evidence tells me that the recession has many young workers moving back in with parents.  Many students recently graduated college with the promise of a hot job market, only to find things frigid in employment land.

Others may be freshly laid off and in need of a place to land until they get back on their feet.  Either way, it can be a tough time for both parents and their grown kids.  Here are a few ideas for smoothing the transition.

Have an end game in mind.  When kids move back home with parents it is a good idea to establish a time line up front – if not for moving out, at least a time to reevaluate things.  This way parents do not get the idea this is a permanent arrangement, and kids are not worried about getting kicked out next week.

Sit down with her and help develop a budget. Make room in the budget for saving money towards a down payment for another home, or the first month’s rent for an apartment. Unless kids have absolutely zero income, let them participate in at least some of the household expenses.  Ask them to pick up groceries a couple times a month, or pay the telephone bill, etc.  This will actually help them budget their earnings by reminding them that these are expenses they will again encounter when living on their own.  Simply blowing entire paychecks is not an option.

If their budget has room, charge rent.  Charging rent to adult children is a controversial topic.  There is no right or wrong answer here, and much of it is situational.  If my kids wanted to return home just to save money, I would probably ask for some help with the mortgage.  If they just went through a divorce, or were let go from a job, or some similar financially devastating experience, I would probably allow more time to get established before asking for rent money.

Some people will argue now is the time for tough love.  They will advise against taking kids back in, and forcing them to fend for themselves.  I guess something could be said for that, but I am a big softy.  If my kids came to me with a big financial mess, and needed a place to temporarily land while they straightened things out, there is no way I could refuse.  Of course, my feeling are somewhat contingent upon their work effort.  If I know they are busting their butt to make things right I could support them fully.  If they wanted to lay around in their room and play Xbox 360, well, that would be a different story!

When and if I did start collecting the rent money, and if I could afford it, I would put the money, or a portion of the money, in a separate account.  I would then return the rent money collected to my child in the form of down payment assistance, or towards a furniture fund when they were ready to move out again.

Agree to a transition period.  It might be difficult to jump from mom and dad’s house back into the real world without some assistance, at least initially.  If you offer financial assistance to get kids back out of the house, again it is a good idea to have an end game in mind.  Let them know up front that you can help them the first three months they are in their apartment, but at the end of that time they need to be earning enough to support themselves.  After all, you have your own retirement to save for, and can only help for so long.

After a couple ties the knot one of the more important things that has to be settled is who will handle the bills.  I’m in favor of both husbands and wives being involved in the finances, but in most relationships there is one person who will take the lead.

In the Frugal household, I am the nerd.  I enjoy reading and learning about money.  I keep up with the market (as painful as it is these days) and try to learn more about various investing vehicles.  Right now our main priority is becoming debt free and building an emergency fund, but once that is in place we plan to really pour on the savings.  My wife is involved in any major financial decisions, but I typically handle the mechanical transactions like balancing our checkbook, scheduling payments, writing out checks, etc.  She’s happy with that, but honestly I would like her to be more involved.

Recently, I created a list of accounts and passwords and we sat down together to make sure she knew where everything was, financially.  We reviewed insurance policies, debts and savings, and went over how to handle things in the event something happened to me.  I’m ashamed to say this was the first such discussion since early 2007 when I had rotator cuff surgery.  We should really make it a point to review these types of things more frequently.

One piece of advice I would give to other couples in our situation is to give your spouse one small piece of the finances to manage.  In our case, my wife now handles all of our household bills and utility payments.  I take care of the big-picture stuff–retirement contributions, debt payments, college savings for the kids, etc.

Ultimately, I would like for us both to be equally involved in all aspects of our financial plan, but it’s not really feasible with two kids and a busy schedule.  Let’s face it, most days the last thing you want to do is get together to enter transactions in Quicken, or schedule an extra payment on your car, so I typically handle those types of things and we communicate on where we stand.

Here are some additional tips on managing money as a couple:

• Have a budget meeting at least once a month to discuss upcoming expenses.  My wife might not know I’m planning to buy new tires for our car next month, and I might know that money is due for yearbooks and soccer registration.  Failing to plan for these types of expenditures can lead to debt, or even worse, marital strife.
• Non-working spouses need to be just as involved.  For some reason, stay-at-home moms and dads are often left out of the picture because they do not “earn” an income.  They should be just as involved in the financial decision-making as the income-earning spouse.  After all, it isn’t my money and her money, it’s our money.
• Both couples should have an open view to debts.  Hiding debt is one of the worst things you can do.  I know, because I hid aspects of our debt totals from my wife because I didn’t want to worry her.  Instead, I shouldered all the worry and resented her for spending money that I had planned for debt repayment.  The best thing I ever did was come completely clean about where we stood so we could develop a game plan together for tackling our debts.
• Do not keep a financial scorecard.  Occasionally, my wife and I get caught up in trying to see who can out-save the other.  If one of us spends money on something, the other reminds them of it and it can lead to an argument.  Best to allow both spouses to have a little “blow money” in their envelope system and not ask questions about how the money was spent, or how much something cost.
• Talk openly about your financial goals.  I want to retire early and do something that I am passionate about – with or without a salary.  To be in that position we will have to work hard to clear all of our debts, including the mortgage, and then build a sizable nest egg to live off while I pursue other goals.  Fortunately, my wife’s goals line up well since she hopes to one day help with grand kids and enjoy some traveling that we haven’t had a chance to do early in our marriage.

Ask the reader:  Who handles the money in your household, and why?