Returning Home After College: Key Questions to Consider

Moving back in with your parents can be a humbling experience -- but one that could serve you well financially.

It used to be that young adults would go off to college, bunk in a dorm, graduate, and then live on their own while navigating young adulthood. Not so anymore. These days, it's fairly common for young adults to return to the nest, even after having been away for years at a time. In fact, 50% of young millennials aged 22 to 28 say they plan to move back home after college, according to a recent TD Ameritrade survey.

If you're thinking of moving back in with your parents once you have a degree in hand, you're no doubt aware that there are pluses and minuses to that route. The upside? Free rent (or reduced rent, at the very least). The downside? A potentially glaring lack of privacy, not to mention the underlying stigma of taking a step backward on the road to becoming an adult. Though to be fair, that stigma is waning since so many young adults are recognizing the value of living at home again.

So should you move back home after completing your studies, or rent a place of your own and enjoy the added freedom that comes with it? You may get your answer by contemplating these key questions. 

1. Do I have a ton of debt?

Many college grads today have no choice but to borrow money to pay the bills. If your debt balance is too high a number for comfort, it might pay to move back home for a limited period of time. The money you'd otherwise spend on rent and utilities could instead go toward paying down that debt quickly, thereby saving yourself money on interest and shortening the life of your loans as a whole. And the sooner you shake that debt, the more comfortable you might feel pursuing other life goals, whether it's buying a home or getting married. 

2. Do I have a job lined up?

Graduating college is supposed to make it easier to find a job. But that doesn't always happen. It could end up that you walk away with a diploma in hand, only to find yourself still searching for work months after the fact. If you don't have a job lined up, then the last thing you'd want to do is sign a lease, or commit yourself to any other sort of financial obligation that would normally hinge on a steady income. Rather, you're better off moving back home until you not only snag a job, but get established there -- with at least a couple of paychecks in your account. 

3. Do I have any savings at all?

No matter your age, you need at least three months' worth of living expenses tucked away in a savings account for emergencies. Without that cushion, you risk racking up loads of debt the next time an unplanned bill lands in your lap. If you're lacking in the savings department, moving back home for a while makes sense. That way, you can build that safety net and then move out when you're financially ready. 

Moving back home after college may not be ideal in your book, and it is not an option for everybody. But if you have a ton of debt, no job in sight, and a bank account balance that leaves much to be desired, then it's probably the right thing to do -- assuming your parents are willing to have you.

Remember, you don't have to resign yourself to another four or five years of living under your parents' roof. Moving back home for even a year post-college could work wonders for your finances and help you avoid some of the financial stress so many recent grads face.