Moving Back in With Your Parents: Financially Smart or Social Suicide?

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After college, you have two choices for where to live: 1) moving back in with parents to save money, with the potential sacrifice of personal freedom and 2) getting your own place, which gives you the ultimate level of freedom, but takes a big chunk of each paycheck.

So, which is the right decision? Does moving back in with your parents make you a financial genius – or a social pariah?

Benefits of moving back in with parents

There is a clear benefit to moving back in with your parents when you finish school: money. Assuming you would be paying $500 per month for rent, which is a dream in many big cities, you can save $6,000 per year by living with your family.

There are some other perks to living with your parents compared to an apartment. You get things such as free cable, power, water, trash, sewer service, and parking. All these expenses could easily amount to a few hundred dollars more per month in your own apartment. But say you avoid just an extra $150 per month on top of $500 rent by living at home – that’s $7,800 per year in savings!

What can you do with $7,800 per year? Here are a few ideas:

  • Start an emergency fund
  • Save up for a new car
  • Save for a down payment on a house
  • Pay off your student loans early
  • Go on a crazy party weekend in Vegas and still have thousands of dollars left over to pay your student loans (avoid the high roller tables)

Think about it – if you have $20,000 in student loan debt, living with your parents could save you enough to be debt-free in a little more than two years! Crunch the numbers yourself using our student loan prepayment calculator below to see exactly how fast you could pay off your loans.

Student Loan Prepayment Calculator

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I actually lived with my parents for about a year after graduation. Working in downtown Denver, I saved at least $900 per month in rent. It was a big factor in my ability to pay off my $90,000 MBA two years after graduation.

Drawbacks of moving back in with your parents

So let’s be real for a moment. No hot date is going to be impressed with, “I’ve been having a great time, want to come back to my parent’s place? It’s cool, I live in the basement.”

Hot and heavy dating issues aside, there are some legitimate drawbacks to living with your parents after college. Much of that depends on you, your parents, and their level of respect for your freedom as a grown up with a fancy new college degree.

When I lived with my parents after college, I had complete freedom to come and go as I pleased. But that still didn’t make me too excited about the prospect of returning home at 3:00am after the bars closed to drunkenly deal with a barking dog announcing the time of my return. (By the way, thanks for that Rocky.)

My parents lived a ways from any light rail station and going back home to the suburbs did impact my social life. It made it so I didn’t really want to make the trek downtown for a night on the town or deal with the logistics of coming back afterwards.

However, that did not make me a social pariah by any means. All of the social life issues I had from living back at home were due to my own self-imposed ideas about how far I wanted to go for a night out.

About half of new graduates expect their parents to support them financially, so you are far from alone if you decide to move back in with the parents. You shouldn’t expect yourself to be marked as the loser for living at home – just make sure aren’t still there 10 years from now.

How to make living with your parents not suck

If you do decide to take your parents up on an offer to save thousands of dollars, here are some tips to make the experience more comfortable for both of you.

  1. Set clear guidelines on things like curfews and drinking. Remind your parents that you lived on your own for four years, are an adult of the legal drinking age, and come to an agreement that is respectful to their wishes and your needs.
  2. Find a “crash pad” with a friend for rare occasions when you want to party like it’s 1999. If you have a close friend or a few close friends who live in a desirable area, you might be able to exchange a night on the couch for a round of drinks.
  3. Communicate appropriately. You might be an adult who wants to come and go as you please, but do your best to communicate your schedule to your parents. Telling them ahead of time when you plan to stay out late or crash at a friend’s house prevents them from wondering where you are.

Making smart financial decisions is not a bad thing

Your friends may joke with you a bit, but don’t let anyone pressure you into believing that living with your parents to save money will ruin your social life. I know dozens of people who have lived with their parents as an adult and have no problems with friends or dating.

If you have friends who push you too much on the topic, maybe you have the wrong group of friends. Or, in a couple of years when you are debt-free and they are still making big loan payments, you can return the favor by rubbing it in their face.

Either way, the financial winner does best in the long-run.

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