There's no place like home - especially if you're a recent college grad. Fighting that urge to fly the coop could end up saving you some serious money and sanity. Here are four reasons why staying at home may be a sound idea.
1. Lower Rent
These days, the cost of living can be pretty high. If you've landed your first post-college job, things like rent, groceries and utilities can end up taking a huge bite out of your paycheck. And if you're still looking for that first job, getting your own place is a great way to rack up debt.
Living at home is a great way to cut back on expenses. That doesn't necessarily mean those expenses will go away entirely - mom and dad might not want you mooching off them until you're in your 30s – but it does mean that you'll be paying a whole lot less than you would for your own place. In fact, it's actually a good idea to pay your "landlords" at least a modest amount of money each month (if you're able) so you don't become complacent about your living situation. Living at home isn't a permanent solution, and this should get you used to setting aside money each month to pay your rent in a timely manner. (If you think you're ready to move out on your own, read Are You Ready to Rent?)
2. Location, Location, Location
Where your parents live could end up saving you not only a good bit of money but time as well. A long commute can really take its toll on your finances. If mom and dad are located in an area closer to your job than you could afford, you might end up saving a pretty penny on gas.
Your parents' address could also end up saving you money on your car insurance. Insurance companies charge lower premiums to those who live in nicer areas, and usually offer discount, multi-car rates when you put your car on your parents' policy.
Think that living on your own is the key to a glamorous lifestyle? Think again. Chances are, your parents' digs are going to be nicer than what you can initially afford. You could also save a ton on nonessential but nice to have expenses like cable TV, broadband internet or a Netflix subscription. Not to mention that much of the furniture you take for granted at home will have to be purchased or borrowed for your first attempt at ruling your own roost.
But it goes beyond money. While hitting up your local McDonald's for dinner after work might be convenient (and a little more interesting than the classic college ramen), it just doesn't stack up to a home-cooked meal. And you may not be able to afford those daily jaunts to the coffee shop once you're on your own. (Learn about saving on food in 22 Ways to Fight Rising Food Prices.)
In addition, making the transition from school to a set 40-hour work week can be a tough one students aren't often prepared for. If you are one of those students who booked all your courses for 11 a.m. and stayed up until midnight finishing last-minute essays, this change of time can really wreak havoc on your emotions. Living at home can make it that much easier to handle because you will have a personal support system waiting for you after your long day at work.
A roommate can also provide a support system, but finding a good roommate can be a tough endeavor. If you end up with "the roommate from hell," you may come home from a horrible day at work to discover that it's "Hawaiian Party Wednesday" and a whole fraternity has invaded your home. At least if you're living with your parents, you know what you're getting into. It may not always be a good thing, of course, but if living with your parents is a painful experience, at least you'll have that much more of a reason not to screw up when it comes time to hit the road.
4. Bide Your Time
If you're still on the job hunt, living with your parents could be the key to eliminating a heap of debt. Not only does living at home save on your living expenses, it gives you the luxury to stick it out that much longer until the right job comes your way. This may also be a good time to pursue internships, which are often unpaid. Once you gain training and experience that will help you land a well-paying job, it will be easier to test your wings and leave the nest.
And if you already have a job, there's no better time to save and pay down student debt than when you're living with your parents. Taking out some of that principal on your student loans now can save you a ton of money in the long run.
While you're at home, you can also save for things like a down payment for your future home or your first month's rent and deposit. It can even afford you the ability to save extra for retirement when you're young and can really use compounding to your advantage. (To read more about the effect of compounding on your finances, see Understanding the Time Value of Money and Delay in Saving Raises Payments Later On.)
When You Should Find Your Own Space
While living at home is a great solution for many people, it's doesn't make economic sense for everyone. If mom and dad live in Oklahoma and you've got a great, high-paying job offer in New York, living with the folks could end up being a very bad idea. Any situation where you'd be making more than you're saving makes a good case for living on your own.
Other reasons why you may not want to live with your parents include:
- Inability to develop your sense of independence
- Financial burden placed upon parents (particularly those that are close to retirement)
- Difficulty bringing home friends, dates or significant others
- Having to deal with curfews or other rules you feel you have outgrown
- Emotional stress level may outweigh financial gain
Furthermore, without the pressures of paying rent and/or living expenses, many young people might not be responsible enough to save for the future. In other words, living with your parents should be a temporary way to help you get a more sound financial footing, not a way to live a more luxurious lifestyle with your increased disposable income.
The Bottom Line
If you're facing loads of college debt or haven't yet found a job, living with your parents could be a really good financial choice. Living on your own might be nice, but financial freedom might just be better.