How Much Money are you Saving by Living With Your Parents? (Updated with 2022 numbers)
If you are a recent grad, you have likely fantasized about making career moves, moving to a new city, or maybe even getting your own pots and pans. Instead, you might be moving in with your parents. According to Forbes, 50% of Millennials and Gen Z plan to move back in with their parents after graduating college. Whatever steered you to decide to move back in with your parents, hopefully this post gives you some confidence about your decision.
Some of you may choose to live at home, but many of you have no other option. Do you find yourself hesitating about moving back home? Or maybe you are considering spending your savings just to get some space from your family? Regardless of the specifics, have you thought about the impact saving money on rent can have on your future?
This is an excellent opportunity to start saving like a millionaire.
For illustrative purposes, let’s consider Sophia, a fictitious 23-year-old. She had other plans for herself, but she is living at home for various reasons. She wakes up grateful for safety and shelter, but she is also human and feels a little nostalgia for what this year could have been. Let’s run some numbers on the potential financial benefit of living at home to make her day a little brighter.
Doodle credit: Rachelle Locey
LET THE SAVINGS BEGIN
If Sophia were not living at home, she would be spending $1,100 a month in housing expenses. After 12 months of living at home, she could save $13,200 that would have ‘normally’ been spent on her rent, wifi, utilities, and parking.
WHERE SHOULD SHE PUT THIS EXTRA CASH?
Sophia is comforted by these additional savings in her bank account today. She remembers her economics teacher explain inflation, the stock market, and compounding interest. Now what is a girl to do?
Here’s her 5 step game plan
One year of savings, Thirty years later
**This chart assumes a 7% annualized growth for her investment over time. The 7% is based on historical data of S&P500 returns. **
By living at home, Sophia has safety, shelter, and savings. She also has significant savings for not only today, but also for the future. If you are living at home, please be thankful for your dishwasher and applaud your future self because the financial trade-off is immense.
