Money

7 Reasons You Should Move Back In With Your Parents

Last week Pew Research Center report revealed that more young adults live at home now than during the "Great Recession." This news was met with a variety of responses in a slew of blogs and articles: confusion, disbelief, curiosity, smugness, and irritation were just a few of said responses. And some even postulated that this is the "new normal."

The research shows that, while employment rates have improved, and wages are closer to being where they were pre-recession, 86 percent of 25- to 34- year-olds live independently in 2015 compared to 88 percent in 2010.

Chicago Tribune financial columnist Gail MarksJarvis addressed the offending demographic directly in a piece tilted “Dear Millennials, You’re Ruining the Economy." “Adult children curled up on their parents' couches don't need to buy their own furniture.” Marksjarvis wrote.

She may have a point, but there are legitimate financial reasons to move back home. In fact Millennials living at home might be smarter than the rest of us who are writing high rent checks each month.

1. SAVINGS

This is the obvious one, but making the most of moving back at home depends heavily on the amount you can save in that time. It’s important to note that areas seeing the most improved employment numbers, like the San Francisco, Washington D.C., Seattle and New York, are some of the same where rents have also spiked. Median entry-level salaries aren’t going to cover median rents (along with deposits and other upfront fees) immediately and the "30 percent rule" is something young adults have likely only read about. Living at home — and paying zero or partial rent — can help you save the money that you would be paying on rent.

 
Here's Why Your Rent Is Too Damn High

Here's why your rent is too damn high.

Posted by ATTN: on Wednesday, August 5, 2015

 

2. TIME TO CATCH UP ON THOSE STUDENT LOANS

The $1,306 billion Americans owe in student loan debt represents a more than 150 percent increase since 2006 and moving home provides a little breathing room to put a dent in paying it off. Living at home could help you get into a more manageable payment schedule so your good ol’ pal Sallie Mae leaves you alone before you hit retirement age.

3. MENTORSHIP

Just as identifying a mentor in the workplace is important, in order to have a career trajectory and leadership style to emulate, being able to take cues from parents for less intuitive budgeting and financial practices is an added benefit of being home. While this generation is less likely to need to how to physically balance a checkbook, making smart 401k investments and learning purchase prioritization are things parents can teach their adult kids by example. Even when they slip up, it's a teachable moment.

4. INVESTING

Earlier this year, financial service providers like Bank of America Merrill Lynch and BMO revealed significant spikes in the number of 25- to 34-year olds enrolling in automatic retirement investment programs. The Transamerica Center found that three out four Millennials factor companies' retirement benefits and investment plans as they consider job offers. A Millennial living at home might reallocate the additional funds they've saved from not paying exorbitant rent for a set amount of time to other investments they're likely to see a return on — like retirement, a cost-effective car, a work-appropriate wardrobe, long-term entrepreneurial endeavors, coding lessons, computer software, or any other necessary industry-specific materials.

5. AVOIDING ADDITIONAL DEBT

Federal Reserve statistics and other government data found the average American household owes $7,400 on credit cards. However, 36 percent of Americans aged 18 to 29 have never had credit cards, many of whom are putting off getting one for as long as possible. This goes a step beyond saving your money. It specifically means not spending money you don’t have. (Even if it is at IKEA to furnish your apartment.)

6. BUILDING CREDIT

If you do have a credit card, living at home is an opportunity to build credit and strengthen your financial profile, should you need to be approved for anything from a lease to a loan in the future. Show that you can pay for things or be consistent about reimbursing funds you've borrowed. Make small purchases and payments you know you can afford — i.e. what you can spare from your bank account. Bring your credit card balance back to $0 every month, pay your car's lease in full, settle your phone and insurance bills on time.

7. RELIEVING AND REINVESTING IN FAMILY

A 2012 Pew analysis of census research found that nearly half of 25- to 34-year-olds living at home paid some form of rent or contributed to household expenses. While this helps as far getting into the habits you’re likely to have for the rest of your life, sometimes moving home helps the parents out too. Having an additional member of the workforce pour money into utilities or additional expenses can help relieve a family’s financial strain or help mom and dad put a little more towards that nest egg.