6 money moves to make when you move back home with your parents
Somewhere between 30% and 50% of Millennials are currently living with their parents. While there are a lot of different ways of thinking about this statistic, most of the folks I know who have had to move back home don't feel great about it.
No matter how you frame it, moving home often feels like failure, at least at some point in the process. But if you make the right financial moves from the beginning, you ensure that the process is as painless as possible, and you set yourself up for financial success in the future.
Whether you're moving home because you lost a job, can't find a job, or your job doesn't pay a living wage, take these steps as soon as you can. (See also: 7 Ways Millennials Are Better With Money Than You Are)
1. Know the Financial Expectations
If possible, sit down with your parents before you move home and talk about your mutual financial expectations. Do your parents want you to pay rent? To buy your own groceries or contribute to a household budget? Will you pay any of the utilities while you're living there?
Most people who move home continue to pay the bills that pertain only to them. This includes things like covering your own phone bill, health insurance premiums, and other, similar bills. Some people, though, find that going on their parents' cell phone plan, for instance, is cheaper than having their own.
The point is to hash out these things before you move home and write them down. That way, everyone will be on the same page and it will be easy to ensure that everyone is holding up their end of the bargain. This also allows you to keep some measure of independence and feel more dignified about the whole thing, because you will be able to pay for as much of your own stuff as possible.
2. Set Goals and Make Plans
Moving home can feel like a dead end, but it doesn't have to actually be one. Most young people don't want to live with their parents long-term, which can be a relief both for you and your folks. Before you move in, or soon after doing so, decide how you want to proceed.
This will depend a lot on your current situation. If you're carrying debt, you might want to focus on paying that off before you move out. Or you may want to land a job that pays more, or finish your education.
Having goals will make you feel better about moving home, because you will be able to see your move as a step forward in your overall financial life, rather than a move backwards.
Goals alone are not enough, though. Once you know where you're going, draw up a blueprint for how to get there. Decide which classes you're going to take, start making extra payments on that debt, or begin applying for jobs that meet your criteria.
Not only will this empower you and move you forward, but it will help your parents see that you are a responsible adult, even though you moved back into your childhood bedroom.
3. Agree on Boundaries
While it will be important for you and your folks to hash through all sorts of boundaries, the ones I'm thinking of here are financial in nature. Unless you're in truly dire straights, decide that you will not borrow money from your parents. And even if they won't take your money for rent, find ways to contribute to the household. You can buy food, pay for meals out, purchase cleaning supplies and clean, etc.
Let your parents know what boundaries you're setting. Let them know that you plan to clean the bathrooms every week, that you're available to run errands on the weekends, or that you don't need anything more from them than what has already been agreed upon.
4. Get a Job
This won't apply to folks moving home because they are underemployed but, for everyone else, this is not a free ride. The goal of moving home is to get yourself into a better financial place for later on, so you should be working.
Even if the only job you can get is the one you had during high school, take it. Since you're at home, you probably don't need as much money as you would otherwise, and some income is always better than none. Working will also make you feel better about yourself, and will show both your parents and future employers that you are willing to do whatever it takes to move forward.
5. Pay Off Debt
If you have debt, start paying it off as soon as you can. Moving home can save you quite a bit of money and, instead of putting this toward your own pleasure, take steps to make your financial future brighter. Even if you only have student loans, start putting more towards them every month. A couple of extra payments now can mean huge savings in interest later!
Paying off debt should probably be your first goal upon moving home. Make a concerted effort to pay off as much as possible, and you will feel better about your decision to not live on your own. Even if you have a crappy job, you should be able to make some extra payments when you're saving money on things like rent.
6. Start Saving
Don't have debt? Great! Start saving. If you're not spending money on rent, you should be putting it towards something useful, and an emergency fund (or a move-out-of-my-parents'-house fund) is a great way to feel good about your decision to move home.
If you play your cards right, you can use your time living at home to get a nice little nest egg. That way, you'll be able to cover all of your moving expenses when you move out, and you'll have enough left over for other things that come up (like car problems, paying for a wedding, etc.).
Moving home doesn't have to be a death sentence. Even if you feel like you've failed financially, these moves can set you up for future success. Take the long view and you will be happier with your decision.
Why did you move home? What financial moves did you make when you did?
Related: 5 tips to help you land your first job out of college