Moving Back in With Mom and Dad — How to Make the Money Work

Moving Back in With Mom and Dad — How to Make the Money Work
BY Justine Nelson
Sep 21, 2020
Key Takeaways:
  • Since the start of COVID, many young adults have moved back to live with their parents to save money.
  • Both sides must follow basic financial rules, for example, watching spending.
  • Parents need to be careful not to deplete retirement funds, while the younger generation should try to save money.

Since the coronavirus outbreak earlier in 2020, young adults, including Gen Z and millennials, are moving back to mom and dad’s in droves. Widespread unemployment coupled with ballooning student loan debt, has contributed to many young adults to pause the start of their independent lives and move back home instead.

In July, 52% of young adults lived with one or both of their parents, up from 47% in February, according to a Pew Research Center analysis of Census Bureau data. With so many young adults moving back home, parents may be starting to feel the financial strain of supporting their adult children while not losing sight of their own financial goals. Younger people, in turn, may be wondering which bills to pay, how to manage paying rent to parents, as well as all other costs.

Whether you’re the parent or child in this situation, if you’re unsure of how handle this new living arrangement, here are some tips on how you could manage money while living together.

Moving back home with parents is the norm

The trend of young adults moving back in with their parents isn’t new. In fact, living at home with parents was the most common living arrangement in 2014. Compare that to the 1960s, when just 20% were living at home with parents, and 62% were married or cohabiting in their own household.

Living at Home

Source: Pew Research Center and 2014 American Community Survey (IPUMS)

As the generations age, it’s clear that shifts in marital status, employment, and educational attainment have impacted the living arrangements of young adults today. For example, the median age at first marriage is now 29 for men and nearly 28 for women, according to the U.S. Census Bureau. Since millennials are waiting longer to marry, many are not living with a romantic partner and instead have other living arrangements, such as living with their parents.

Beyond not living with a spouse, the cost of education has played a role in young adults’ living arrangements. More than one-third of millennials who did not receive a college degree live with a parent, versus just 19% of those who did. Even though college graduates have been able to weather the labor market during the pandemic better than those without a degree so far, both groups have seen an upward trend in living with a parent versus a spouse or partner.

Everyone is feeling money anxiety

Parents and adult children alike are feeling financial pressure as the country navigates another recession. Although the stimulus checks issued through the CARES Act provided much needed reprieve for millions of Americans, the bill left out dependent college students. Not only did they not receive their own stimulus check, their parents also did not receive the extra $500 per college-aged dependent.

While college graduates who file their own tax return may have received a stimulus check, staying on top of student loan debt continues to be a struggle. In 2018, 65% of graduating seniors had student loans and owed an average of $29,200 each. The burden of student loan payments has made it harder for these generations to get ahead financially — so many of them move back home.

While Gen Z and millennials scramble to stay on top of debt, parents are also dealing with their own financial strain. It’s been harder to save for retirement and just when parents were ready to be empty nesters, they’ve had to rework their finances to accommodate their returning children.

How to make money work for parents and adult children

If circumstances brings your loved ones back home to live as a family unit again, you might have some concerns about how you’ll make the household budget work for everyone. Should you cover your adult child’s living expenses? Should you cover all of their needs again, or should they be at least partially independent? Here are three tips for both parents and young adults to stay on track financially.


  • Do not compromise your retirement savings. Keep saving and investing in your retirement Don’t pull from your retirement account to cover your child’s expenses.

  • Review your budget. With more people living under one roof, expect a change in utility bills, groceries and even car costs, and plan accordingly.

  • Help with the essentials, not the fun. If you have the means, you may want to consider covering basic living essentials for the family including mortgage payments, utilities, and food. Any extra fun spending should be your child’s responsibility.

Gen Z and Millennials:

  • Get on a budget. Write down what expenses you still need to take care of while living with parents. Take a look at your monthly income, debt and expenses and make a plan for your finances each month.

  • Save for future living expenses. Living at home may be only temporary, so take the opportunity to save for a deposit on a new apartment and moving expenses for when you’re back on your feet.

  • Use unemployment benefits to your advantage. If you are collecting unemployment, you may use this time to pay down debt or build up an emergency fund.

Instill positive money values

Families who talk about money issues constructively may find themselves in a better position to navigate shared living arrangements. One great way to instill positive money values is to set your boundaries in the beginning. Establish what you will pay for, what you won’t pay for, and what you expect your adult child to pay for.

In addition to financial boundaries, you can factor in non-monetary expectations. Instead of paying rent, your adult child could help run errands or contribute to household chores. Just be mindful that they’re adults, too, so you’ll need to walk the fine line between roommates and a parent-child relationship.

Even if you move back home, make your money work

If your new living arrangements has you reevaluating your financial and debt situation, there are a few ways to manage it. The Freedom Debt Relief debt management guide can walk you through your options and come up with a plan. Get started by downloading the How to Manage Debt guide here.

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