You’ve finished your college degree and are ready to begin becoming independent. Living by yourself can indeed be expensive as the expenses can increase quickly. If you land an employment opportunity right away, the low starting salary and the absence of savings could cause you to struggle to maintain.
A possible solution is to move to live with your parents. This might not be attractive to an adult who is looking for freedom. However, living with your parents could be one of the best financial decisions you can make at this stage in your own life.
Expert in personal finance and business Amanda Abella earned her MBA in 2010. She resided with her parents for 7 years before moving away alone.
“From a financial perspective, I wouldn’t have been able to do most of what I’ve done if I hadn’t lived with them for a while,” she added. “I completed my degree in 2010. That was quite a financial disaster. It was fortunate that I could remain in my home.”
Abella is in a position to save money and invest in her business, create a new venture, and even take on risks, things that she says she wouldn’t be able to accomplish if she is alone and paying her expenses right from the start. It’s unlikely that you’ll stay in the same house with them for seven years, but it is possible to benefit financially from spending a portion of your time in the home with your parents.
You Can Jumpstart Your Savings
The issue of saving money is very prevalent across America. In the U.S., most individuals cannot pay for a $400 emergency. The convenience of living at home could aid in saving to create an emergency fund and set an enduring foundation on which you can sustainably provide for yourself when needed. This is especially the case if you’re living in a place with a higher cost of living.
Save cash by not having to pay:
- Utilities (gas, electricity, internet)
- Insurance for mortgages or renters
Abella states that being with her parents was a way to get by in the first place. “I wasn’t making nearly enough money at my last job to survive in a city like Miami,” Abella stated.
You Can Conquer Your Debt
If you’ve accumulated many student loan debt during school, don’t worry. You’re not the only one. There is a staggering 45 million borrowers of student loans across America, and they are paying over $1.71 trillion. The average student loan payment is approximately $300. That could take a significant chunk of your savings.
Rent-free living with your parents may not be enough to make the minimum payment affordable; however, it could let you put an extra amount toward your balance. Making more payments than required will help cut down the interest rate and put money toward your principal debt.
You Can Start Investing Early
If you’re looking to invest, the time you have is your most excellent partner. However, many students are unable to afford to support their first dollars, particularly if they’re burdened with the burden of debt. Being at home with your parents lets you free rent, which is usually the most significant expense you incur, so it’s easier to begin investing in the future. The typical household expenditure on housing is 27% of all costs. This amount of money can be set up on an automated monthly savings plan to reach a sum by the conclusion of the “stay-at-parents time.”
It is possible to start making investments in the form of an IRA as well as 401(k) and 401(k), as well as investing in the stock market. If you begin investing when you are 25 instead of 35, this will yield a much larger fund, possibly allowing you to retire earlier.
You Can Spend Less on Food
It’s not difficult to blow your food budget, especially if there’s no experience shopping for groceries and making cheap food items. You’ll likely share your meals with friends and cook a homemade dinner instead of greasy fast food. This is also an excellent chance to take an education in cooking your meals so that you can eat at a reasonable cost after you’ve moved out.
You Can Afford to Take Chances and Be Picky
Being with your parents can provide evident financial benefits. One benefit you may not know about is that being with your parents could be an opportunity to test different things.
Being able to control your costs is an excellent way to ensure you’re not forced to accept any position or settle in a subpar area because you only have to pay. Investing more aggressively and trying your best to create a company is also possible.
Abella was happy that she had left when she was in the perfect place. “Living with my parents allowed me to be more picky because there was no rush,” Abella explained.
Frequently Asked Questions (FAQs)
Is the time right to return home?
The time to relocate depends on your family’s financial condition and your relationship with your parents. If you enjoy a great connection with them and need to reduce your expenses and save money, it might be beneficial for you to relocate. If, however, doing this could cause tension between your parents or you’re not required to conserve your money, it could be beneficial to keep your independence.
How many college graduates go back to their homes?
In the year 2019, research carried out for T.D. Ameritrade found that 58 percent of young millennials went back home from college. A third remains for a minimum of two years.