Why living with your parents is not as bad as you think

Regardless of all of the negative connotations, living at home can provide some wonderful financial benefits. Learn more.

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A recent study by Pew Research revealed that young adults, ages 18-34, are living with their parents at the highest rate since 1940. It's likely that you've read at least one of the countless negative reports on this statistic, but most people aren’t saying that living at home with your parents is not as bad as you think.

There are the valid points of concern with the Pew Research statistic. I'll unpack the four main factors first before turning the table. The primary drivers of millennials living with their parents are: lack of jobs, low income, high student debt, and lower rates of marriage.

Why Millennials Are Living At Home

A 2013 study by CNN Money shows that stock market trends have recovered from the economic recession, but employment has not. Only 6.2 million of 8.8 million jobs that were lost in the recession have been recovered. Lack of jobs has hit millennials the hardest, as more experienced workers are willing to fill entry-level jobs young adults are looking for.

For those that do find jobs, income prospects are bleak at best: the median millennial salary for each state, with most states falling in the range between $18,000 in Montana to $26,000 in Maryland. Washington D.C. was the lone outlier on the high end at $43,000.

Student loans play a factor in the financial decision to live at home. According to Mark Kantrowitz of Edvisors, the class of 2015 graduated with an average student loan debt topping $35,000. The debt load coupled with the low median salary makes it difficult for a twenty-something to leave the nest.

The last factor in the boomerang of college graduates returning to their parents' home is the severe decrease in marriage and cohabitation. Not only are people getting married later, but many are foregoing a partnership altogether. For the first time, the percentage of young adults living with their parents' outnumbered those living with a spouse or domestic partner. Without a partner pressuring a millennial to get out of their parent’s house, it may be easy and convenient to stay.

Millennials Benefit From Living At Home

Not all hope is lost, even though millennials are opting for their childhood bedrooms. People who live with mom and dad to save on rent and other housing expenses can set themselves up for financial success as long as they are diligent in paying down debt or saving for retirement. This simply isn’t possible for many millennials stretched on a budget that is dominated by rent or a mortgage.

Living at home can give an edge to a millennial that is in the job market. For college graduates living on their own, the pressure to pay their steep bills can prompt them to accept the first job offer they get. Those living at home with less pressure from housing bills can take extra time to wait for the right job opportunity to come through.

From a career growth perspective, staying out of a lease or a mortgage can open up opportunities for work in different cities. Many millennials share the need for mobility. A Rent.com survey stated that 43% of millennials had moved away from their college or hometown. Further, 44% said they planned to move again next year. Having a home base to come back to when the latest adventure falls through gives some the courage they need to try something new.

It's not actually that surprising that home ownership is significantly down for 18- to 34- year-olds, as they generally value experiences over things. One study by Harris, a polling company, said 75% of millennials would choose to spend money on experiences or events instead of an item. It shouldn't come as a surprise that a millennial may opt to live with mom and dad to afford their next vacation or overseas trip.

Despite the potential upside for millennials, it's important to note that those that do not have a plan and do not take any significant action while having help from their parents do a disservice to those around them. They can drain their parent's funds, which could delay retirement. They can potentially slow economic growth by not spending on items that favor growth. Millennials who move home for the financial and flexibility perks should have a plan and show progress towards independence.

Topics:
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This article was written by Kaytie Zimmerman from Forbes and was licensed as an article reprint from June 1, 2016. Article copyright 2016 by Forbes.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and not legally affiliated.
The images, graphs, tools, and videos are for illustrative purposes only.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917.
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