More College Grads Moving Back Home

The number of college graduates who move home is at an all-time high, according to a poll by the consulting firm, Twentysomething, Inc. The survey found that 85% of college grads will return to Mom and Dad’s nest after graduation in hopes of finding a job and saving money. Moving back home and turning to your parents for financial help has become the norm and it really pays off for some.

Although living with Mom and Dad again may not sound very appealing, boomerang kids have the opportunity to save money, learn good personal finance habits, and become more financially secure before moving out on their own. If you’re one of the thousands of college graduates who is moving back with your parents, take advantage of this grace period and start saving and investing wisely.

1. Save money

   The No. 1 reason kids move back home after college is to save money. Living with your parents allows you to save the money you would normally spend on rent and put it in the bank. Whether you pay the bills or live rent-free, saving is much easier when you live cheaply. The more money you can save while living at home, the better your finances will be when you move out.

2. Develop good money habits

   Living at home can expose you to good personal-finance habits. Whether you want to obtain a credit card or start investing in a retirement fund, your parents can help you achieve financial freedom and develop good money habits for life. While at home, observe your parents’ financial habits and ask questions to get a good idea of how they spend their money and invest.

3. Learn the value of money

   Many college students have misconceptions about money and enter the real world with a lack of personal financial knowledge. All graduates, including those who took out loans to pay for school, could use a refresher in the value of money. Living at home can help you learn the value of money because you’ll have less of it to spend and will appreciate the cash you do have.

4. Financial security

   College grads who live at home have the financial security of their parents to help them stay afloat until they can move out on their own. Some graduates will get a free ride from Mom and Dad, while others will have to pay their dues for living at home. Either way you look at it, you’re getting a good deal. Having the financial support of your parents makes transitioning from college to the real world much easier.

5. Invest sooner

   Moving in with Mom and Dad after college can make it easier to invest sooner. College graduates can save tons by living at home and the money they don’t spend on rent can be invested into a savings plan. One of the smartest financial investments graduates can make is to start a retirement plan, such as a Roth IRA. These investments will help you manage your cash flow and prepare for the future.
   

   6. You can learn from your friends’ mistakes

      Living at home allows you to learn from your friends’ financial mistakes. Many college grads jump the gun on moving out because they want their own space and independence. While some friends may live within their means and have no financial problems, many end up overspending and have to move back home. When you live at home, you can be a spectator and learn from your friends and determine the right time to move out.

   7. Pay off student loans

      Living with your parents after college makes it easy to start paying down your student loans. Living at home allows you to save tons, so you can afford to put more money toward student loans. Chipping away at these pesky loans will help you pay them off in a timely manner and free you from debt.

   8. Incentive to find a job

      Considering the current state of the economy and the rising unemployment rate, finding a job is a difficult and often demoralizing task for college graduates. Moving home may be the only option for graduates, but it may also be the ticket to getting a job. Depending on your situation and your parents’ expectations, you may not have a choice but to find work right away. Pestering from Mom and Dad may be just what you need to get serious about job hunting and finding a job. Once you secure a job and get them off your back, you’ll feel relieved and more financially independent.

   9. Build and/or fix your credit

      Living at home allows graduates to establish or fix their credit. It’s important to build good credit or fix a damaged credit score before you move out because many apartment owners and even employers conduct credit checks. If you’ve never had a credit card or form of credit, now is the time to do so. If your credit score is less than stellar, then you can use this time to improve it.

   10. Budget for the future

       It is far easier to budget for the future when you don’t have rent going out the door each month. Use this time at home to set a budget that will help you achieve your financial goals. Budgeting will also give you a better idea if you can truly make it without your parents and how much it’s going to cost you when you move out.