Parents often get a little wistful when their children grow up and head off to live independently. Well, for about five minutes anyway.
Somewhere between sipping your morning coffee without pants on and cooking whatever you fancy for dinner, it hits you that being an empty nester has its advantages.
While you savor your newfound free time, remember to think about the financial moves you can make now that your situation has shifted.
Here are five suggestions to help you begin.
1. Lease Out Your Vacant Bedrooms
Empty nesters frequently consider downsizing to a smaller, easier-to-maintain residence.
Although that’s sensible guidance, it isn’t necessarily the best choice for everyone. If your mortgage is paid off or you live in rent-controlled housing in a market with steep rental rates, staying put could be smarter.
Don’t let those unused bedrooms become storage for dust bunnies. Fill them with renters instead.
Advertise your spare rooms on Trulia or Zillow for longer-term tenants, or create an Airbnb listing to host short-stay guests. If you opt for short-term rentals, consider catering to business travelers to boost your income as an Airbnb host. Also explore money moves that suit your new living arrangement.
2. Reassess Your Vehicle Needs
Once the kids move out, it’s an excellent moment to evaluate your transportation requirements. If you’re no longer hauling piles of sports equipment or driving carpools, you probably don’t need a vehicle that could double as a band bus.
Think about trading down to a smaller, more fuel-efficient car, or even selling one of your vehicles if a two-car household can function with just one.
If you decide to keep a second car, don’t let it sit idle in the driveway. Put it to work to generate extra cash.
While you’re evaluating vehicles, check your auto insurance policy. If your driving has decreased, it’s possible your premiums could be reduced.
3. Redirect Your Cash
You don’t need me to remind you that raising kids costs a lot. Food, clothing, allowances, activity fees and other necessities can easily total hundreds of dollars each month per child.
A large portion of your expenses decreased once your children moved out. Put that freed-up cash toward boosting your retirement savings or paying down outstanding balances.
If you’re free of debt, consult a financial advisor about the best ways to invest the money you used to spend on your children so it can grow. Don’t forget to ask how your empty-nester status affects your taxes so you can plan appropriately. You might also find useful financial advice manage money tailored to this life stage.
4. Update Your Budget
With household costs reduced, it’s time to revisit your budget. You might feel it’s unnecessary, but a solid budget is essential to ensure your financial progress carries over into retirement.
Budgeting tools like Personal Capital and You Need a Budget make planning easier and help track where your money goes.
One benefit of creating and following a budget is that it frees you to enjoy this new phase of life.
After many sleepless nights tending to a colicky baby, you likely daydreamed about all the fun you’d have when Junior left home. Now that time is here, and with a solid budget you can save for that dream trip or the kitchen renovation you’ve been wanting.
5. Grow Your Hobby
When life is full of family obligations, it’s tough to find time for hobbies. With more breathing room, turn your interests into opportunities to earn money while doing what you love.
If crafting is your passion, open a shop on Etsy. Maybe you’ve wanted to sharpen your photography skills and sell prints. Now’s the time!
Pursuing a hobby can generate some passive income, and if you’re ambitious you could even build it into a small business. Just be sure to include any spending for your hobby in your budget so you avoid overspending.
You don’t need a workshop or a hands-on pastime to gain financially. Volunteering with a nonprofit that needs your assistance can be equally rewarding. You probably won’t earn much (or any) money that way, but many volunteer-related expenses are tax deductible.
It’s normal to feel a bit down when your children leave. Give yourself credit for the terrific job you did raising them, and embrace this new chapter as part of the empty-nest community.
Your turn: How did your financial situation shift when the kids moved into their own place?
