Living with one’s parents past college graduation might come with a bit of a stigma, and feelings of guilt from both sides of the equation. But in this economy, it might just be the coolest choice families could make.
“The stigma does not have to be negative,” said Alonso Munoz, CIO at Hamilton Capital Partners, who joined Rob Hart on WBBM Newsradio’s Noon Business Hour this week. “I was looking at some data, Rob, and a lot of these young adults that are living with their parents actually have a job. So, this is a factor of housing being scarce… mortgage rates are rising, rents are, I mean, through the roof, no pun intended.”
It’s not that old stereotype of slackers hiding in their parents’ basements playing video games and eating food they didn’t buy. Data shows that nearly one-third of young adults in the U.S. are living with their parents as economic pressure continues to push the “American Dream” of home ownership further out of reach.
“It is very difficult and challenging for some of these folks… they just simply can’t afford a home or they can’t [find] affordable rent and they live at home,” said Munoz. “What we like to think about though is making sure that doesn’t come at the expense of the parent’s financial situation.”
While parents might not want to charge their kids rent, adult children living with mom and/or dad can contribute by buying their own food and helping out around the house. Both Hart and Munoz shared that they spent some time back with their parents as adults in order to save money and become more financially independent.
In order to make sure the situation benefits both parents and their kids, Munoz recommends that families discuss plans. That can help make the arrangement a financial booster rather than a drain.
“You know, either having something written down or some type of agreement, whether it’s a verbal or... to make sure that this doesn’t come at the expense of the parents,” he said. “We see this very frequently, where parents will tap their retirement savings, they’ll borrow from their 401ks, believe it or not... to help the child move out and afford a down payment or a deposit on a rental.”
With an ongoing “affordability crisis” in the mortgage market, as Munoz called it, many families might want to start thinking ahead about multigenerational living longer than they expected – and a plan that would make it work best for them. Experts cited by Audacy have even noted that families who live together can work to keep their combined wealth in the family amid times of economic stress.
