What do you think of the idea of living with parents in your 20′s? Or, putting the shoe on the other foot, the idea of your kids living with you when they are just of college?
Well, I’ve heard more instances in recent years about people living with parents to save money, which seems like an alternative that’s more appealing during tough economic or personal times. After all, if one is having tough times, can’t find a job, etc – it can help to save money and maybe even get some moral support.
However, in good times when things are going well, why would a grown up kid and his or her parents live under the same roof? Well, the reality is that most people don’t want to do that. People want to grow up, and have their own personal space. Come and go as they please, set up their place as they wish, and be all grown-up. Plus, if dating someone, wouldn’t you want some privacy away from parents?
Of course, all that makes sense. Frankly, that’s how I viewed it when I was that age, and I did not live at home. Rather, I lived in my own apartment 3 hours away from my parents 
However, one can save a lot of money by living with parents. Sure, it involves tradeoffs. A LOT of tradeoffs, in reality, considering some of the reasons I mentioned above for wanting to be independent. Plus, some parents want their own independence from their grown kids. But money can be saved, and it’s more money than meets the eye.
Let’s take an example of somebody who is recently out of college. This person might have a job, and an apartment with or without roommates. Suppose this person lives at home instead, and saves all the money that would have been spent on rent.
If we assume a figure of $10,000 for one year, and say that the person will live with parents for 3 years, that’s $30,000, right? Simple math! And a lot of money!
But wait – it gets better. Let’s say that this person saves $30,000 by the age of 25, during the 3 years post-college. Let’s also assume that the person then takes that $30,000 in savings, and invests it, socking it away as money to help with retirement much later in life – 30 years to be exact. Let’s also make the assumption that the investments earn 8% per year, and compounding is left to do its magic.
At the end of that 30 years, that savings will have grown to over $300,000! That’s right, just 3 years of living at home and saving money on rent could result in over $300,000 by the time the person reaches 55.
Think about the tradeoff: 3 years with parents for $300,000 later in life. Pretty good deal!
Now, one could say that 8% isn’t attainable, or question whether or not inflation is factored in here. Regardless, we are talking about the potential for a lot of money down the line in exchange for a few years with parents. How can it be so bad to live with parents – or a parent, if that’s the case - for a short time?
The thing is, for the most part we are socialized here to leave home either for college or soon after, and to never return under the same roof. It is often viewed as weird or lame to live at home as a grown up. Plus, many parents strongly believe that their kids should be gone at a certain age.
However, in some cultures, it’s not unusual at all for multiple generations to live under the same roof. Grown up kids, their parents, and maybe even a grandparent! So why is considered so taboo here by many, or so hard to fathom? Just do it for a few years, and the long-term savings can be incredible.
Truly no regrets on my part, but wow – I could saved a lot by doing that!
My Questions For You
What do you think of the idea of people living with parents when in their 20′s, in order to save money?
Do you think it would be worth it to do this for 3 years, in order to have $300,000 later in life?
Why do you think so many people – kids and parents – have such an aversion to this concept?
{ 10 comments… read them below or add one }
I did it and I think it was very valuable to help me get ahead! I stayed with my parents for 2 years after graduation – until I saved to buy my first house and get married. I was able to save about $100k over that time and it was totally worth it. I’m glad my parents allowed me to do it!
Robert -Wow, that’s a great start for 2 years right after college. Well done, and kudos to your parents for getting the value of this.
I have three kids (15,13, and 11) and I think this is only a good idea if you set parameters with a definite beginning and end of helping out your adult child. Otherwise, we’ll quickly look like an Italy society and have kids in our homes until they are 35.
Ted – sure, I agree it’s important to have parameters. After all, kids shouldn’t sponge off parents late in life. Frankly, some parents might actually need help or just be less wealthy than their kids.
I agree with Ted. There has to be a conversation from the beginning as to the expectations. There has to be a set end date with little wiggle room. At some point, it stops being healthy and just enabling.
Hank – I think some parameters are very important. Now, I also think that it can be enabling (very) for some grown kids, but can also be really beneficial to other well meaning grown kids. All depends on cultural views, I suppose, that we have here vs. how others around the world might see it.
I have twins who’ll be headed off to college next year. I love my children, but I’m ready for the house to be “mine.” Maybe that’s a cultural thing….but I’m not excited about my kids boomeranging back home!
If they paid rent at that point, I’d like it, possibly, but picking up after them and loaning them money all the time? No thanks. IF they did pay rent and helped out around the house (without me begging), I’d love to have them home. The relationship would definitely have to change….and I’ve got great kids who are straight A students and responsible (when I compare them to their friends!).
Oh, Joe – you say that now but wait until they’re gone for 4 years. If, when the graduate from college, the economy/job market sucks and their prospects suck as well, I’m willing to bet you’ll be more than happy to welcome those “boomerangs” back home if for no other reason than to know that they are safe, housed and fed. Granted, it is VERY nice to have your home to yourself, but we’ve got a college grad, boomerang kid who will have lived with us for 14 months before he re-embarks on his own life and I gotta tell you, once we all adjusted, it really has been very nice to have him home. We all know this is the last time it will ever happen and frankly, it’s been a lot of fun.
If the parent is not opposed to it, I say go for it! It’s a wise financial decision for the child. As a parent I would encourage my children to live with me if they wanted to until they feel financially fit to move on (as long as they are not 40 years old).
Boris – that could really set the kid up very well financiallly. Shared resources have benefits, one would think!