How to Move Out of Your Parents’ House

Living at home was already a financial necessity for many people in their 20s and 30s facing low wages and lingering student loan debt, but the coronavirus pandemic pushed more people to remain at or return to their parents’ homes.

One in five respondents to a 2021 Education Reference Desk survey of more than 400 individuals living at home reported moving back home during the pandemic, and many reported recently increased anxiety over finances.

“The uncertainty of the pandemic seems to be the lasting impact, whether it was through job loss, income reduction, classroom closures, or illness,” Sam Larson, a team member at EduRef, wrote in an email.

The most common reasons survey respondents listed for moving home were to save money and be with family. Some also noted moving home was the result of needing to save money for college, an unsuccessful job search or a college campus closure.

With the economy beginning its recovery and the number of COVID-19 infections declining across most of the U.S., it may be time for those who returned home during the pandemic to make a plan for a place of their own.

Follow these steps to get your finances in order and move out of your parents’ home:

1. Address any mental barriers.

2. Check your credit score.

3. Create a budget.

4. Account for commonly overlooked costs.

5. Make a plan for debt repayment.

6. Talk with your parents.

[Read: Renting vs. Buying a Home: Which Is Smarter?]

Address Any Mental Barriers

The comforts of home call to us all from time to time, but some young adults might find themselves sticking around for reasons that aren’t just financial. After a traumatizing year marked by a public health crisis and economic downturn, it makes sense to seek out the safety and familiarity of home.

But home can also cause some personal challenges. Most Generation Z respondents to the Education Reference Desk survey said living at home hindered their personal growth, romantic relationships and mental well-being. A smaller but still significant portion of millennials living at home agreed.

“There’s a lot of psychology involved and behaviors that need to be addressed before someone can be ready to move out,” says Brendan Sheehan, managing director and owner of Waymark Wealth Management in Massachusetts. “If they’re not being charged rent, paying for the utilities, the groceries, they’ve got their parents cooking for them and doing laundry for them, it’s not very appealing to leave the house.”

If you’re ready to take the next step, start by considering what psychological barriers might be stopping you and seek help from friends, family or even a professional counselor to work through those things.

Check Your Credit Score

Whether renting or buying, a credit score check is a near-universal requirement. Those who haven’t been taking steps to build a positive credit history should start as soon as possible.

Experts say individuals preparing for a move should check their credit score before starting the housing search. If it’s low, consider measures to build up your credit, like fixing any credit report errors, and quick-fix strategies like a rapid rescore.

[Read: What Is an Excellent Credit Score?]

Create a Budget

Go back to basics with a simple budget. Determine your average monthly take-home income, then estimate expenses and research housing costs in your area. Resources like budget apps and spreadsheet templates can help.

“You can’t spend more than you make. Budgeting is not complicated, so just watch those numbers and think about cutting costs,” says Ramona Ortega, founder and CEO of My Money My Future. “One of the things with COVID is that a lot of people have been at home and spending less money.” This savings may be useful for those ready to find a place of their own.

Additionally, she says in the post-pandemic period, many professionals who continue to work from home may consider relocating to a lower-cost area, such as a smaller city or suburb.

[Read: How to Make a Budget — and Stick to It.]

Account for Commonly Overlooked Costs

Experts say it’s important to remember those additional costs outside of rent or a mortgage that will pop up. Whether it’s electricity and Wi-Fi or property taxes, leave a bit of padding in your budget for these extra costs.

A budget should also include a savings plan, such as creating an emergency fund for unanticipated costs.

Make a Plan for Debt Repayment

Millennials and Gen Zers are likely to have some sort of student loan debt. This debt can delay common financial fundamentals like investing and saving, as well as moving out, but it doesn’t have to be prohibitive.

“I know people don’t want to be walking around with the heavy burden of that debt, but it’s also important to start investing and saving,” Ortega says. “The 50/20/30 budget is one we promote, so if you have 20% going to savings or paying down debt, then take 5% of that to invest and 15% to pay down your student loans.” The 50/20/30 rule is a common strategy for setting budget benchmarks that suggests individuals spend 50% of after-tax income on needs, such as rent, 30% on wants and 20% on saving.

“Everyone has to figure out their numbers — I don’t think there’s a number to fit everyone — but have a plan where a small portion of your savings go toward investing because if you let too much time go by, you will be late in the game,” Ortega says.

Another option to pay down debt might be refinancing to receive lower monthly payments, which will also require a credit score.

Talk With Your Parents

Begin communicating your plan with your family. In some cases, young adults living at home may be acting as a caregiver for family members or providing financial help, so it’s important to make a plan together.

Parents may also be able to provide support, such as offering a low-interest loan or co-signing a lease, during the period of transition from living at home to living on your own.

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