Katie (left) and Emily: They've begun paying rent to their parents.

NEW YORK (MONEY Magazine) - The Bosslet sisters had been living back home for a while -- Katie, now 25, for two years and Emily, 23, for four months -- when their parents decided enough was enough.

While John and Barb, both 52, were happy to have the girls back in their suburban Chicago house, they were less than pleased with their daughters' casual approach to the family's finances. Although Katie and Emily had steady jobs as teachers, they didn't pay rent or regularly chip in for food, utilities or other household expenses.

"It just didn't seem like they should get a free ride anymore," says John.

So nine months ago, John and Barb sat their daughters down to inform them of a change in the house rules: Katie and Emily would each have to pay rent of $400 a month and put an additional $400 into a savings account to build a fund for eventual independent living. John and Barb then handed each daughter a coupon booklet for the rent payments, with a space for a $20 fee if they were late.

"Sure, it was a bummer," says Emily. "But it's still a better deal than we'd get on the outside."

The Bosslets have plenty of company in negotiating the details of life with "boomerang kids," as young adults who return to the nest have been dubbed.

With the job market in flux and real estate values in the stratosphere, many young people simply can't afford to live on their own. More than a quarter of 18- to 34-year-olds currently live with their parents; among those 18 to 24, fully 55 percent of men and 47 percent of women do.

Boomerang families face both financial and emotional challenges. Parents who thought their kids were finally off the payroll find themselves facing an extra mouth (or two) to feed just as they're entering the financially critical homestretch before retirement. The kids, who have moved back home to save money, may be chagrined to discover that Mom and Dad aren't willing to give them a free ride.

Then there are the sticky lifestyle questions: Should an adult child be allowed to drink or stay out until the wee hours? Can you make her clean her room or take out the trash? Hammering out the details can be tough, as the Bosslets have learned.

Barb and John now readily admit that they were unprepared for the situation.

"The furthest we thought about our kids growing up was getting them through college," John says of Katie, Emily and their brother Tim, 19, who will be a college junior this fall.

But given the girls' modest salaries -- eighth-grade teacher Emily earns $34,000 a year, while fourth-grade teacher Katie makes $36,000 -- a temporary return home made sense.

Their daughters' coming back was no financial hardship for the family. John's job as a national accounts manager for a salad dressing company and Barb's position as a school speech pathologist provide the couple with a comfortable income in the low six figures.

Prodigious savers, they've been able to pick up the full tab for all three children at the University of Illinois while still investing for retirement.

They were so used to providing for the kids that Barb and John didn't think about asking Katie to chip in for household expenses when she returned home in 2002. Nor did it occur to them to ask Emily when she moved back last year.

There was an unspoken agreement that the girls would pay for their personal expenses, such as their cars and cell phones. Also unspoken, but not agreed upon, was how they'd handle the bills for everything else. Admits Barb: "We were vague and a little inconsistent."

Laying out their expectations about rent and saving has eased the financial tension. In the eight months since, only Emily has slipped up -- once. (And yes, she did pay the late fee.)

The girls are depositing $400 a month into their savings accounts too. Katie now has $6,000 socked away; Emily has $2,500.

Stickier to resolve have been the emotional aspects of having adult daughters -- young women with an active social life -- at home. While they don't have a curfew, for example, they are expected to call if they're going to be late (three or four in the morning is not unusual for them).

The girls understand the rule but bristle at the lack of autonomy and the parental scrutiny. Even harder for Emily is how she feels she's perceived by others -- and how she feels about herself.

"In order to be a true adult, you have to be independent," she says. "And I worry that people think I'm lazy or a mooch."

This feeling is a big factor in Emily's determination to get a place of her own by the end of the summer. She's been scouring Internet listings to get apartment prices, checking out neighborhoods and studying her online bank statements to see what expenses she can cut to swing it. Next up: finding a roommate.

Katie is, in many ways, the obvious candidate. But Big Sister has declined Little Sister's invitation to move in together. Katie is content to live at home, at least until she completes her master's in education in another year or so.

"I'll probably be envious of how cool it will be for Emily to have her own place," says Katie. "But I don't want to eat ramen for five years to prove my independence."

Planners contacted by MONEY offer the Bosslets the following advice.

• Provide practical guidance Barb and John have given Katie and Emily a great lesson in financial responsibility by pressing them to pay rent and save money. Now they should take the lessons further. Sit down with the girls to teach them the basics of budgeting, and develop a realistic spending plan, urges Mari Adam, a financial planner in Boca Raton, Fla. Don't just expect they'll pick this stuff up.
• Don't neglect long-term goals Barb and John have wisely continued to save for their own retirement despite the extra expense of having the girls back home. Now they should encourage Katie and Emily to do the same. Both are eligible for 403(b) plans at work, but neither contributes. Setting aside, say, $4,000 a year starting now could net them a seven-figure nest egg by the time they retire.
• Develop an exit strategy Set a deadline for the girls to move out -- even if that's a year or two away for Katie -- and help them plan for independent living.

Emily, who will leave first, should focus on building an emergency fund of $3,000 to $5,000 and drawing up a first-year budget, says Lynn Ballou, a planner in Lafayette, Calif.

Katie should save aggressively while she's still being subsidized by her parents and start pricing apartments to get a realistic idea about living costs.

John and Barb have mixed feelings about the girls leaving home and are steeling themselves emotionally for Emily's departure.

"I'll be proud of her for meeting her goal," Barb says. "But there are a lot of days when I just look at her across the table and realize how much I enjoy having her around. I'll miss her."

The Bosslets' advice to other parents of boomerangers: Enjoy it while it lasts.

If, like the Bosslet girls, your adult child has come back to the nest, take these steps to ensure family and financial harmony.

Set the rules Talk about who will be responsible for which expenses. Insist that your child pick up at least some of the tab, discuss how long this living arrangement should last, and put your agreement in writing.

Make it a two-way conversation; she's not a little kid anymore, and you shouldn't treat her as such. But in the end, it's your house and what you say still goes.

Resist rescuing "The only way you learn to be responsible is to be responsible," says Susan Morris Shaffer, co-author of "Mom, Can I Move Back in with You?"

So fight the urge to pay your child's bills or lend him money if he runs out of cash before payday or gets into other trouble. The best way to help your children financially is to teach them how to live within their means.

Stay on track Do not jeopardize your own long-term financial security to take care of your adult children. Continue to invest as much as possible for retirement, and you should save for other key goals as well.

Your kids have many more years than you do to get on the right financial track. After all, you don't want to end up having to depend on them for money one day.

You can get additional advice and practical information from a number of books and web sites for boomerang families. Below are some of the best.

Web sites

Monstertrak.monster.com - Provides career advice and job listings for postcollege job seekers.

Quarterlifecrisis.com - Offers job-search tools, an online community and other resources for young adults.

Books

• For parent "Mom, Can I Move Back in with You?: A Survival Guide for Parents of Twentysomethings" (Penguin, $13.95) by Linda Perlman Gordon and Susan Morris Shaffer. Strategies from a therapist and an educator.
• For adult children "Boomerang Nation: How to Survive Living with Your Parents...the Second Time Around" (Fireside, $14) by Elina Furman. Financial, social and emotional tips from a former boomeranger for adult sons and daughters who move back home.