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.
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.
- 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.
- 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.
- 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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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|