Oct 18, 2018
If you find yourself moving home after college, you're not alone. According to recent data from the US Census Bureau, more than one-third of young adults are living at home after college. And their numbers are growing: Since 2005, the percentage of 18-34 year olds living in their parent's home has increased from 26 percent to 34 percent in 2015.
While some may use these figures to justify calling millennials entitled or start diagnosing this phenomenon as a "failure to launch," that's not exactly what's going on. The full census report also shows that by 2015, 57 percent of young adults 18-24 who were living at home after college were employed. Often times, graduates are moving back home for other financial reasons such as paying off debt or saving up a cash cushion before moving out on their own.
While it's not without its challenges, living with mom and dad does have some advantages. Here are three ways that you can make living at home after college work for you and your parents.
If you're one of millions of graduates who has student loan debt, you can use your time at home to tackle it. That's what Candice Latham did when she found herself in tens of thousands of dollars of debt.
"Honestly, if I didn't move back home after college there's no way I would've been able to pay off $47,500 worth of student loan and credit card debt while still being able to have a positive net worth," says Latham, a graphic designer and founder of the financial education site Young Yet Wise.
By living with her family in Boston, Latham says she had an extra $1,100 a month, which she split between savings and paying off her debt. Because she simultaneously prioritized savings and investing, it took Latham seven years to pay off all her debt. She admits it was difficult at times living at home after college, but she doesn't regret it.
"It was tough going from having full freedom to having to abide by my mom's rules," she says, "but it was worth it to me to be able to get ahead financially. Now I'm 28 and all of my debt is paid off!"
In addition to paying off debt, college graduates who move home after college can also use this time to save money, like Latham did.
Ashley Hill, a scholarship search strategist and founder of College Prep Ready, says she was able to save six months of living expenses during the two years she lived in her parent's home. She did this, as well as saving for emergencies and her retirement, in part by living as frugally as possible. Fortunately she didn't pay rent, but she also found ways to cut expenses, like shopping at second hand stores for her work attire. This allowed her to automatically put $150 from each paycheck into her savings.
Hill says graduates can also use their time living at home after college to start preparing for their future.
"It is crucial for college grads to start planning now so that they have adequate funds for retirement," she says. "Too many retired people are struggling financially because they underestimated how much savings they need to live on during their retirement."
While Hill lived at home, she opened a Roth IRA and set up automatic contributions. She says she was able to put $1,200 annually into her retirement account during this time by cutting out entertainment expenses and taking her own lunch to work four days a week.
When you move back home, it's easy to fall into the default parent-child relationship that was in place before you went to college, but the reality is that you are now an adult. While this can lead to sticky situations — like who pays for what or whether your parents set rules, as Hill's did — there are a couple of things you can do to make the transition easier.
Hill and Latham both said that at some point adult children should contribute financially to the household. Latham paid her mother $300 in rent and bought her own food. While she certainly wasn't paying market Boston rent, she was still helping. If you can't contribute financially, Hill suggests pitching in by picking up more work around the house. Keeping the kitchen clean and doing your own laundry are easy places to start.
Communication is also key when you move back home with your parents. Clearly discussing expectations and establishing boundaries is one sure way Hill believes parents and adult children can avoid unnecessary conflicts. For example, do your parents expect you to move out at some point? What is the timeline for that? Are you paying rent, buying your own groceries or paying for your cell phone?
Hill says that in her case, she clearly communicated with her parents that her move back home was a temporary situation so she could work, save money and finish the last of her studies. While she says they initially treated her like she was still in high school, she would give them gentle reminders about their agreement, and eventually, they backed off.
Moving back home after college may not be ideal, but it is a reality that some graduates are facing. As both Latham and Hill pointed out, it can be a little awkward to move back in with your parents and sometimes friction can occur. The key to a smooth transition is to communicate with them openly and agree on the terms up front. Instead of looking at this time as a negative, take advantage of it. Work to pay off your debt and save money so you can have a better financial foundation when you move out on your own.