Graduation is an exciting time – especially if you have a job lined up and you are ready to go out and earn your fortune.
And if you’re lucky enough to find a job near home, and your parents are okay with it, it may be tempting to move back in and stash away some cash. So should you move back home? There are many factors to consider, and it’s up to you to decide whether it makes sense in your situation.
Saving Money
This is an obvious one. If you are living rent-free, or paying your parents a small amount of rent way below market rate, then you are going to watch your money pile up quickly. I’m currently living rent free (thanks Mom and Dad!) back at home not far from Philadelphia, and I quick Google search suggests that an average one-bedroom apartment in the city goes for $1,525/month. This amounts to $18,300/year! (Less if you live with roommates, which is what I’ll definitely do when I move out) There is a ton you can do with an extra $18,300 a year: pay down student loans, save for a car or a down payment on a house, buy a jet ski… (I’m not judging, I want one too). Personally, I am considering saving to buy a property when I move out and renting out rooms to cover most of my mortgage payment. This will allow me to build equity in an investment property rather than just throwing my money away towards rent. Whatever your reason, moving back in after college will definitely make your financial life easier.
Career Opportunities
Where you decide to live will have a huge effect on your career growth and the opportunities presented to you, which you better believe will have an impact on your financial life. Most careers have greater opportunities for growth in major cities simply because of their size. If your home is in a rural town, for example, you’re not likely going to have the same earnings and growth potential as you would in a city like New York or Boston. So while you may be saving more money on things like rent and food, these savings may soon become trumped by the increased earnings you may have scored if you lived and worked in a larger metropolitan area.
Social
It is also important to consider how your decision may impact non-financial aspects of life. A big one is your social life—your small town may have been fun in high school, but socializing back at your old stomping grounds becomes more difficult after college. Your old friends might have moved away, or you might come to realize you just don’t have that much in common with them anymore. Once you get tired of heading to the same local watering hole every weekend, you may be anxious to move somewhere bigger and more exciting. Living in a city could make it easier to meet similar people and always be finding interesting things to keep you busy. While your wallet will take a hit on rent each month, it may be worth it once you realize how much fun you’re having.
Final Thoughts
As for many decisions, money is only part of the equation – there are many other reasons why you may or may not decide to move back in at home after college. Maybe you just want more time to spend with your parents before you find a place of your own; or maybe, no matter how much you care about them, the thought of moving back in with them has you pulling your hair out. Whatever you decide, remember that your financial situation is an important consideration. Spending even just a few months back at home can allow you to save a few thousand dollars, and that may be enough to take away some of the financial stress for the next few years—but sticking around too long may have equally important opportunity costs.
