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Published September 26, 2018

Living at Home? It’s a Smart Way to Chart a Financial Future

Credit Unions

If you are a young Millennial living at home with your parents, you’re not alone. According to Pew Research people 18 to 34 years old who are living with one or both parents is now the most common living arrangement for this age group – 32 percent of Millennials are doing it. This is a higher percentage than Millennials living alone, with roommates or setting up house with a spouse or partner. Pew points out that this percentage of young Americans living with parents is the highest in more than a century.

Why do Millennials live with their parents? A variety of factors may influence young adults’ decisions to live at home, says Pew, including the parents’ willingness to have them move back, lack of success in the labor market, the expense of independent living, debt obligations (especially student loans) and saving for future life plans.

Consequently, Pew data show that Millennials are putting off some key life milestones – marriage, parenthood, home ownership – as they work toward economic security and to fulfill their dreams.

Burden of Student Debt

The biggest monetary concern for college-educated Millennials is their student loan debt. Student Loan Hero reports that college students and graduates owe more than $1.4 trillion in student debt, spread out among about 44 million borrowers. That’s about $620 billion more than the total U.S. credit card debt.

In fact, the average graduate has $37,172 in student loan debt, and current default rate is 11.2 percent.

Living at home during college does have its advantages. Better Money Habits Millennial Report conducted for USA Today, points out that Millennials who lived at home during and after college carry considerably less student loan debt ($8,100) than those who lived on their own ($17,700).


High Cost of Housing

The high cost of housing, especially in major urban areas, is keeping Millennials at home. Indeed, looked at geographically, just 14.1 percent live at home in North Dakota compared to 46 percent in New Jersey, according to a Business Insider article by Andy Kiersz. In Santa Clara County, home to numerous universities large and small, the median home price is $715,000 and the average monthly rent for an apartment is about $2,812.

Benefits of Family Help

The popular view that parents groan when their adult children move back home and immediately begin scheming to get them out again could not be further from the truth, according to a Clark University Poll of Emerging Adults, based on a national survey of 18- to 29-year-olds. Of the parents who have an “emerging adult child” (i.e., Millennial) living with them, 61 percent describe their feelings about it as “mostly positive” and only six percent describe the experience as “mostly negative,” according to the study.

When emerging adults live at home, parents’ lives may be disrupted in various ways, but they are more likely to see benefits than burdens, the study notes. “The three top consequences that parents have observed from having their grown kids at home are all positive, with 67 percent of parents saying they feel closer to their child emotionally, 66 percent saying they have more companionship with their child and 62 percent noting that their emerging adult helps with household responsibilities.”

Jeffrey Jensen Arnett, a research professor at Clark University and director of the Clark University Poll, told the Huffington Post, “I think it’s a great thing overall that there’s this wonderful closeness between parents and emerging adults today, and I really think it’s unprecedented in human history.”


Achieving Financial Security

Based on parents’ willingness to help their children, it’s quite within the realm of possibility that mom and dad will keep the home light burning for Millennials who want to save more before they strike out on their own.
“For a Millennial facing a tough economy and not much societal pressure to pair off or have children, saving money by living with mom and dad makes a lot of sense,” writes Huffington Post’s Shane Ferro in her article More Millennials Living At Home Reflects How America Has Changed. “It will help them pay down their debt and be ready to contribute to the economy a decade from now.”

According to an online report on CNBC, Here’s What Millennials are Prioritizing Instead of Retirement, written by Esther Bloom, Millennials are serious about savings, but for different reasons than their parents, and certainly their grandparents. “In defiance of conventional wisdom, young people are outperforming everyone in saving,” states Bloom.

As they look to the future, Millennials are indeed exploring uncharted territory as the first generation to plan for financial freedom during the whole course of their lives, according to a study released in May 2017 by Merrill Edge, a subsidiary of Merrill Lynch.
The study points out that a majority (63 percent) of Millennials are looking to save a set amount of money or income necessary to enjoy their desired lifestyle, compared to the majority (55 percent) of Gen Xers and baby boomers who are saving primarily so they can leave the workforce and retire comfortably.

While they may have their age-related worries and challenges, Millennials continue to be focused more on the short term, with a tendency to prioritize positive life experiences today instead of investing for tomorrow. But they are nevertheless optimistic about their financial future with the Better Money Habits Millennial Report pointing out that 80 percent believe they will, over the longer term, be better off than their parents.

 

© Copyright 2018 CO-OP Financial Services. All Rights Reserved.

January 3, 2019

Meriwest Credit Union Exemplifies the Credit Union Motto of “People Helping People”


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December 26, 2018

5 Top Habits to Help You Stress Less About Your Finances


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If your finances are a constant source of stress and anxiety, you’re certainly not alone. In fact, 40 percent of American adults say they would have a tough time covering an unexpected expense of $400 or more, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017...

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December 5, 2018

How to Set Yourself Up for Success During the Holidays


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November 21, 2018

What Are the Benefits of CO-OP Shared Branches?


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Credit unions have a reputation for community involvement, but they also have an extensive national footprint. That’s good news for customers at many credit unions, who have access to thousands of branch locations through CO-OP shared branches...

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November 7, 2018

7 Habits of Highly Successful Savers


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For more than 25 years, CEOs, business leaders, and entrepreneurs have cited Stephen Covey’s The 7 Habits of Highly Effective People as the business book that transformed their thinking and launched their success...

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October 24, 2018

How to Create a Budget You Can Live With


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October 10, 2018

How to Create a Resilient Retirement Plan


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September 26, 2018

Living at Home? It’s a Smart Way to Chart a Financial Future


Living at home?
If you are a young Millennial living at home with your parents, you’re not alone. According to Pew Research people 18 to 34 years old who are living with one or both parents is now the most common living arrangement for this age group – 32 percent of Millennials are doing it...

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September 12, 2018

What Are Credit Unions And How Can They Help You?


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August 30, 2018

Is It Safe to Bank on Wi-Fi?


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August 15, 2018

How to Use Credit the Right Way


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When you’re working to build or rebuild your credit history, how you use credit is everything. It’s important that you use credit the right way to build and maintain a good credit score...

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August 1, 2018

The Most Important Rule of Investing


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There's one golden rule that you should always keep in mind and observe when you're investing: Never invest money that you can't afford to lose. Investing is not saving. There's a significant difference between saving and investing...

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July 19, 2018

Planning for Retirement: An Introduction


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Even if you truly love your work, the day will come when it’s time to punch out for the last time and start your retirement. And when that day comes, you’ll want to have a robust financial plan in place...

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July 3, 2018

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A financial plan gives you a road map for handling your money in a way that cuts stress and builds security. It’s crucial for meeting goals, such as buying a house or creating a nest egg that will last long after you’ve collected your final paycheck...

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June 18, 2018

How To Make a Financial Plan


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A financial plan gives you a road map for handling your money in a way that cuts stress and builds security. It’s crucial for meeting goals, such as buying a house or creating a nest egg that will last long after you’ve collected your final paycheck...

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June 5, 2018

Should You Rent or Buy a Home?


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May 22, 2018

The Huge Expense of Cultural Norms


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May 8, 2018

The Five Enemies of Your Financial Success


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The path to financial success is actually surprisingly simple.Spend less than you earn. Do something sensible with the difference.That’s it. If you do that each month, each year, each decade, you’ll have quite a lot of financial success. Debt will melt away...

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April 9, 2018

National Credit Union Youth Month: The Science of Saving


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This April, we are celebrating National Credit Union Youth Month and we encourage you to bring your children into any of our branches to learn more about the Science of Saving. Saving your money isn’t always easy, especially when you don’t have a lot to spare...

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March 27, 2018

What to Do if Your Aging Parents Are Going Broke


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It’s a money leak that no one’s talking about: Nearly one in four Americans helps support a parent financially, according to a Care.com survey. But most families don’t discuss the issue — or the dollars involved — until a health or other crisis arises, says Jody Gastfriend, vice president of senior care at Care.com.

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March 15, 2018

This Simple Rule Tells You Where to Put Your Retirement Money


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IRAs. Roth IRAs. 401(k)s. SEP IRAs.

Simple IRAs. Considering all the different types of retirement accounts can get a little dizzying. With all these options, where should you be socking away your retirement dollars?

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February 28, 2018

The Disasters That Can Ruin Your Finances (and How to Avoid Them)


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To protect against floods, some people build houses on stilts or pilings. For tornadoes, there are storm cellars. And in the event of a fire, most buildings have (mandatory) smoke detectors and fire extinguishers. There’s no doubt the idea of a disaster can be terrifying, but in many cases they can be avoided—or at least insured against—with some smart planning...

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February 13, 2018

Charity of the Month: Abode Services


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February 1, 2018

How to Open a Credit Union Account


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Credit unions are a great place to keep your money and get loans. They’re usually a safe bet for finding free checking, and rates on savings accounts and loans are competitive. What’s more, these institutions are typically local, so they keep money (and their attention) in the same community you live in...

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January 17, 2018

Parent Trap: Supporting an Adult Child Will Cost Both of You


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You can’t blame parents for wanting to help their adult children. But when they fork over cash for their kids’ daily living expenses, parents may jeopardize their children’s long-term financial success — and put their own retirement at risk..

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January 8, 2018

5 Homeownership Changes Coming Under New Tax Law


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Will the new tax law save you money or cost you money? The answer depends on a complex array of factors that touch on just about every aspect of your financial life. This article is about a subset of your finances: How the tax law will affect homeownership and mortgages...

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September 11, 2017

Charity of the Month Thomas Russell Middle School


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It’s that time of year again! School is back in session. During the month of August, Meriwest Credit Union’s Milpitas branch was busy getting hundreds of students ready for the new school year...

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September 8, 2017

Equifax Data Breach What Can Consumers Do


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August 17, 2017

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