Many college students think about what life will be like after graduation. They imagine landing their dream job, making a good salary, and moving out of their tiny dorm room and into a great house or apartment.
Unfortunately, many new grads won’t get to the part where they move out of mom and dad’s house and strike out on their own. Skyrocketing tuition costs as well as the rising cost of living is making it harder than ever for millennials to become financially independent.
A recent Pew study found that for the first time in 130 years, living with parents is now the most popular living arrangement for 18- to 34-year-olds. Millennials are choosing to stay single for a longer period of time. Back in 1960, 62% of those age 18 to 34 were living with a spouse or romantic partner. By 2014, that number declined to 31.6%. Now, roughly 32.1% are residing with their parents.
In addition, millennials are staying put so they can reduce costs, save for a rainy day, and pay down educational and credit card debt. This is a contrast to a previous trend where adult children would leave the nest, only to return home to live with their parents. These “boomerang” kids fell on hard times, so mom and dad became a temporary safe haven.
Here are some of the main findings from the Pew Research Center study:
- Roughly 35% of young men were living at home with a parent compared to 29% of women.
- More young women (16%) than men (13%) are the head of household without a spouse or partner.
- Young men (25%) are more likely than women (19%) to be living in the home of another family member or in a group setting.
- Approximately one in four young adults never marry.
Income and residence status
Not surprisingly, the study found that economic factors such as income affected a millennial’s choice to stay at home or move out. Those who were employed were less likely to remain at home than those who didn’t have a job.
When broken down by sex, young men were found to be more likely than young women to be living at home due to employment status. Employment among young men seems to be on the decline. In 1960 young men were employed at a rate of 84%. Fast forward to 2014, and that percentage declines to 71%. Salaries for young men have also been on the decline. The study results have been more favorable for women, who have had a more positive outcome when it comes to securing employment, according to Pew research.
Taking care of your finances
Are you still living at home? Here are some money tips for future success.
If you’ve chosen to stay at home after graduation, this is a good time to beef up your emergency savings fund. When it comes to building your savings, you want to have at least three to six months of cash in reserve for those times when you’ll need money in a pinch.
Work on bad money habits
This is also a good time to adjust any bad financial habits you picked up while you were in school. If you used to spend money without a clear plan in place, change your ways by developing a budget. This way you will be able to stay on track and monitor how much money is going into and coming out of your bank account.
Even though you’re living with your parents, you should manage your money as if you were on your own. This way, when it’s time to move out, you’ll be financially prepared to handle all of life’s surprises.