Why Living With Your Parents Can Be the Best Money Decision You Make

Mother and daughter using digital tablet on sofa

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You’ve graduated from college and are ready to start your life as an independent adult. Let’s face it: Living on your own is expensive, and the costs can add up quickly. Even if you score a job right away, your entry-level salary and lack of significant savings might make it hard to keep up.

One solution is to move back in with your parents. It might not seem appealing to a newly minted adult eager for independence, but living with your parents can be one of the most suitable money decisions you make at this point in your life.

Personal finance and business expert Amanda Abella graduated in 2010 and lived with her parents for seven years before moving out on her own.

“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 said. “I graduated in 2010, which was an economic nightmare. Fortunately, I could stay home.”

Abella has been able to save and invest, start a business, and take risks—things that she admits she would not be able to do if she was on her own and paying all her bills from day one. You may not plan to live with your parents for seven years, but you can still reap the financial benefits of spending at least some time living with your parents.

You Can Jumpstart Your Savings

Saving is a big problem in the U.S., with most people being unable to afford a $400 emergency. Living at home can help you start saving money so you can build up an emergency fund and lay down a strong foundation with which to sustainably support yourself in the future. This is especially true if you’re in a city with a high cost of living.

You can save money by not paying:

  • Rent/mortgage
  • Utilities (gas, electricity, internet)
  • Renters or mortgage insurance

Abella says that living with her parents helped her save in the first place. “I wasn't making nearly enough money at my last job to survive in a city like Miami,” she said.

You Can Conquer Your Debt

If you racked up a lot of student loan debt while in college, you’re not alone. In fact, there are nearly 45 million student loan borrowers in America, paying back more than $1.71 trillion. Average student loan payments are around $300, which can take a big bite out of your budget.

Living rent-free with your folks might not make those minimum payments affordable, but it may allow you to put more toward your debt. Paying more than the minimum can help you cut down on interest and put more toward the principal balance.

You Can Start Investing Early

When it comes to investing, time is your best friend. The problem is many recent grads simply can’t afford to get started with investing, especially if they’re shackled with debt. Living at home with your parents frees up rent money—typically your biggest expense—so you can get started on investing for your future. The average household spend on all things related to housing is 27% of total expenses. Thus, this saved portion of the budget can be set on automatic monthly savings plan to achieve a certain goal by the end of the stay-at parents period"

You can start investing in an IRA or 401(k), as well as the stock market. If you start investing at age 25 instead of 35, it will result in a significantly bigger nest egg—possibly even allowing you to retire early.

You Can Spend Less on Food

It’s not hard to blow your budget on food, especially if you don’t have experience grocery shopping and cooking affordable meals. It’s likely you’ll be sharing some meals with your folks—and maybe even getting a home-cooked meal instead of greasy takeout. It's also a good opportunity to get a crash course on cooking for yourself so you can eat on a budget when you move out.

You Can Afford to Take Chances and Be Picky

Living with your parents has clear monetary advantages. But one perk you might not realize is that living with your parents can be a safety net to try new things.

Keeping your costs under control means you don’t have to take just any job or move into a less-than-ideal place because that’s all you can afford. You can also be more aggressive with investing and take chances on starting a business.

Abella was grateful to move out at the right time for the right place. “Living with my parents allowed me to be more picky because there was no rush,” she explained.

Frequently Asked Questions (FAQs)

When should you move back home?

When to move home depends on your financial situation and your relationship with your parents. If you have a good relationship with them, and you need to cut back on expenses, then it could be helpful for you to move home. However, if doing so would build tension with your parents, or if you don't need to save the money, then it might make sense to remain independent.

What percentage of college graduates move back home?

In 2019, a study conducted on behalf of TD Ameritrade found that 58% of young millennials moved back home after college. Nearly a third of them stayed for at least two years.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Reserve. "Report on the Economic Well-Being of U.S. Households in 2018 - May 2019."

  2. Student Loan Hero. "A Look at the Shocking Student Loan Debt Statistics for 2021."

  3. TD Ameritrade. "Boomerang Generation, Returning To the Nest," Pages 9-10.

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