The Long-Term Value of Saving Money By Living With Parents

by TTMK on November 29, 2012 · 12 comments

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?

{ 12 comments… read them below or add one }

The College Investor November 30, 2012 at 6:49 pm

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!


TTMK December 3, 2012 at 9:04 pm

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.


Ted December 2, 2012 at 9:14 am

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.


TTMK December 3, 2012 at 9:05 pm

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.


Hank December 2, 2012 at 4:56 pm

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.


TTMK December 3, 2012 at 9:07 pm

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.


AverageJoe December 4, 2012 at 5:00 pm

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!).


jim March 21, 2013 at 7:52 pm

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.


Boris December 5, 2012 at 5:18 pm

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).


TTMK December 6, 2012 at 7:14 pm

Boris – that could really set the kid up very well financiallly. Shared resources have benefits, one would think!


Michelle July 24, 2013 at 8:20 pm

I wish it were an American custom to design houses with 2 wings–one for the grandparents and one for the young adults; separate entrances, small kitchens, their own parking. I like having my bunch nearby but not right under my chin! My mom has lived in a perfect garage apt for 10 years and its so private that I have to go around the corner to see if she’s home! AND…we just bought a “5th wheel” camper to put out back for the 24 year old son who needs time at home to “regroup”.
#1 Mom pays a small rent which leaves more for inheritance :)
#2 The son will pay a small rent and we will put it into a savings account for when he needs it.
I highly recommend it!


keportal December 20, 2014 at 5:35 pm

I’m in a very different situation. I’m a male almost turning thirty and still live with my parents. I have a full-time job. I am happy to move out and had a serious discussion with my parents about wanting to move out. However, for some reason (maybe cultural in that I am Asian) my parents don’t want me to move out. They literally begged me to stay with them and keep trying to sweeten the deal for me by offering to cook for me, clean for me, do all the laundry, and pay the bills. It feels strange because it is like having maids and servants do everything for you.

I have been working full-time now for about five years after leaving university. Living with my parents, I’m saving about $50,000 per year and investing it. Five years of working full time working with parents means I’ve saved up about $250,000, and stock market and property price increases have seen my investment increase to somewhere between $350,000 to $400,000.

My parents do not control me. They let me do what I want. I keep everything I earn. My dating life is quite bad. I’ve been on dates and have had relationships, but the girl is usually not happy with my arrangements, and I am now currently single. I think about moving out, but when I do the calculations on paper, I find that it is much cheaper to get an escort or prostitute rather than be hit with paying rent or mortgage interest.

Deep down, I also feel I have developed a hatred for my parents. I feel as if they are keeping me in their house for selfish reasons, but of course I am an adult and I can leave if I want to. I read Elliot Roger’s manifesto and strangely feel that I can relate to him. I feel as if living with my parents for the long-term may make me resent them. Like I said, I am an adult and I can move out at any time, but when I do the calculations, I just cannot justify it.

It is hard to live with the parents, but I rationalize it by telling myself that saving money always requires hard work. You have to go to work, work hard, and keep your expenses low so that you can invest the difference. Working hard is never easy, and I see living with parents as work, and it does have a big payoff.

I have learned that the biggest challenge in saving money and building wealth is not small things that make no difference like skipping the morning soy latte. The biggest challenge is controlling your temptations and controlling your desires to give in to cultural expectations. There is a template for life heavily influenced by religion and culture that is propagated through media. It is that a man must leave his parents, grow up, get a good job, develop into a real man, meet a girl, and through romantic love they become a couple, get married, have children, buy a nice house, and live happily ever after. This is the fairytale. The biggest challenge when saving money and building wealth is to rebel against this fairytale.


Leave a Comment

Previous post:

Next post: