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Moved back home? Here’s how to make it work

Peter WardenThe Mortgage Reports Contributor

In this article:

If you’ve moved back home with your parents, chances are your primary goal is to save up to move out on your own. Here’s how to make the most of your time with your parents:

  • Understand your spending habits.
  • Set goals, and make a realistic budget to achieve those goals.
  • Adjust your goals to fit reality. If you’re regularly failing to meet your targets, you may have set impossible goals from the start. It’s okay to adjust those goals once you have a better understanding of your monthly expenses.

Moving back home? You’re not alone

So you’ve moved back home to your parents’ place. How on-trend can you get? Pew Research Center reckons very nearly one-in-three American adults are “doubling up.” It defines that as living with another adult with whom you have no romantic relationship.

And almost half of those are adult children living at home. So we’re talking about roughly 20 million people who are in the same position as you.

But that’s not exactly living the dream. Here’s how to keep your digression to your parent’s place as short as possible.

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Why did you go back home?

As the numbers have changed, so have the reasons for adult children living at home. Remember when those who did so were the butts of jokes? The Urban Dictionary defines “living in mom’s basement” thus:

“Stereotypical home for the geek, nerd, fatbeard, loser, etc. The term implies that the individual still lives with one or both of his parents despite being a grown man. Reasons for still living at home may include a lack of drive and ambition, being unable to afford a place of his own due to spending all of his money on his hobbies (i.e. Star Trek figurines, comic books, and online role-playing games), or just plain being a mama’s boy.”

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The Urban Dictionary is already out of date. Many millennials now regard living at home as a positive stepping-stone: something that will enable their ambitions.

Improving your long-term finances

Financial consolidation is now one of the key drivers behind some young professionals moving back home. They see the move as a strategic withdrawal rather than a retreat.

Some have overburdened themselves with debt and need a breather from living expenses to ease the load. Others want to be homeowners and need a similar break to save for a down payment.

How to save — fast

Whatever your motivation, it’s likely your No. 1 priority will be to make your stay at Chez Parents as brief as possible. It’s kind of them to help out, but it’s going to put a strain on you and them.

If you’re serious about saving, you need to change the way you look at money — and its role in your life. You’re no longer earning to support a lifestyle: your whole focus is on saving.

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Understand your spending

You won’t get far maximizing your savings without first understanding where your money’s going. Unsurprisingly, there are apps for that, many of which are free. Google “spending tracker apps” and pick one you like.

If you prefer the old-fashioned way, collect all (really, all) your receipts in a big envelope and analyze your spending in a spreadsheet or ledger monthly or weekly. You’re looking to categorize your types of expenditure and come up with totals for each.

Set goals

Your objective is to differentiate between your wants and your needs. You may for an intensive period of saving be prepared to forgo many of the things you like but don’t need: date nights, restaurant meals, coffee-shop purchases, booze, newspapers, Netflix … perhaps even avocado toast.

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That’s your discretionary spending and the area where savings can be made.  You also need to know the expenses you have no choice over, including commuting costs, keeping your phone connected (but do you have the optimum package?) and any contribution you’ve agreed to make to mom and dad.

Finally, you need to compare all your spending with all your income.

Even those who are unusually self-disciplined find it easy to lose sight of their good intentions. Life intervenes and you quickly get back into bad habits.

You must set yourself ambitious yet realistic goals for your savings. Once you’ve analyzed your discretionary spending, you’ll be able to say, “I will save X every month.”

Automate

Now open the best savings account you can find. Don’t expect a high yield in the current environment, but find the best you can through some online comparison shopping.

Establish an automated payment of the dollar amount you decided you can afford from your checking account into that savings account. That will make it harder for you to make spending exceptions. Feel free to make manual payments when you have windfalls, such as tax rebates!

Don’t beat yourself up

Accept that you won’t always meet your saving goals. Some months, an unavoidable call on your funds will arise: perhaps a family wedding or funeral, or an urgent car repair. You’ll have to make a manual transfer from your savings account to your checking one.

You have to see such events as facts of life over which you have no control. So don’t beat yourself up when they arise. That way lies the madness of thinking, “This isn’t working so I’ll just give up and go back to my old ways.”

Adjust your goals to reality

If you’re regularly failing to meet your savings targets, you have to ask yourself why. Is it that you’re being too quick to indulge yourself when you’re tempted by treats? Or is it that you set yourself impossible goals?

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If it’s the former, you need to straighten yourself out. But you should probably reset your targets if it’s the latter. You’ll lose your motivation if you constantly fail. And you can only ask yourself for your best efforts.

Conversely, increase your goals and automated savings payment if you find you have spare money in your checking account each month. You’re not being tough enough on yourself.

Moved back home but only briefly

Few people find intensive periods of high-impact saving fun. It involves sacrifice and self-denial.

But the period of self-denial will be shorter the more disciplined you are and the greater the sacrifices you make. And, if you’ve moved back home to your parents’ home, that might be your biggest motivator.

Some of the techniques laid out here can be used throughout your life, though alongside a much less frugal lifestyle. For example, having an emergency fund means you won’t be forced into high-cost borrowing when some minor disaster arises. You’ll be the master of your debt rather than its slave. And you’ll have the resources to exploit opportunities to invest.

Don’t let these tough times put you off saving. Make it a lifetime habit.

Verify your new rate (Sep 19th, 2018)