"Financial Planning ... it's not always about money."

Gen Z's big gamble

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting

Gen Z is living with their parents to save money. But it could cost them, big time, over the long haul.

After graduating from college in 2021, Bethany Clark moved back in with her parents. She planned to spend a year studying full time to be a teacher, so it made sense to live at home in Surrey, England, while she wasn't earning an income. But when she landed her first teaching job the next year, she didn't leave. "I didn't see the point in moving out without any savings," she told me. Two years later, at 24, she's still living with her parents and plans to stay for another year, maybe two.

Clark is not alone. There are 620,000 more adults living with their parents in the UK than a decade ago. In the US, the percentage of young adults living at home has climbed 87% over the past two decades, according to the US Census Bureau. Now more than half of 18- to 24-year-olds in America are living with their parents. And in a recent survey by RentCafe, 41% of adult Gen Z respondents who lived with family said they thought they'd be living with other family members for at least another two years.


iStock image

The trend starts with the housing market. In 2022, Moody's reported that the average American renter was spending more than 30% of their income on rent for the first time, a benchmark that the government considers "rent-burdened." And even before the recent market spikes, HotPads estimated in 2018 that Gen Zers would spend $226,000 on inflation-adjusted rent in their lifetimes — about $24,000 more than millennials and $77,000 more than baby boomers. This has created a significant strain on the youngest renters. In a 2023 Bloomberg News and Harris Poll survey of 4,100 adults, 70% of 18- to 29-year-olds who lived with their parents said they would not be in a strong financial position if they chose to live elsewhere.

"I work in the same area as where my family lives. I can't justify moving down the road and paying extortionate rent just for a bit of extra space," Clark told me. While she pays a small amount of rent to her parents, she's able to save most of her income.

Homeownership is similarly out of reach. While some Gen Zers have managed to sneak into the housing market, the average age of first-time homebuyers reached a record high of 36 last year, the National Association of Realtors found. More than one-third of Gen Z respondents in a 2022 Freddie Mac survey said it's something they thought they'd never be able to achieve.

In the wake of the Great Recession, millennials were the first generation to stay home en masse, and now Gen Z is following in their footsteps. But unlike millennials, who were called lazy for living with their parents well into their 20s, it's become cool for Gen Z to live at home. In today's affordable-housing crunch, older generations are starting to understand that it often just makes sense to stay home and save up. But that decision comes with downsides. Living on your own is an important step in becoming an adult, and research indicates that those who put off leaving the nest are going to pay — financially and emotionally.

Historically, more young people have stayed with their parents during times of economic uncertainty. In 1940, at the tail end of the Great Depression, 48% of 18- to 29-year-olds lived with their parents — a rate that hadn't been surpassed, until 2020.

A similar share of young adults lived with their parents in the wake of the Great Recession in 2010 — 44%. Millennials were just entering the workforce in a brutal time to find work. Despite the historically punishing economy, baby boomers often blamed millennials' penchant for living with their parents on technology addiction and laziness. In 2013, Bloomberg unveiled an entire ad campaign aimed at millennials, focused on the 22 million college grads who still lived at home, featuring messages that read: "You're a drain on the country's economy, sweetie pie," and, "We're not ashamed of you, but we're getting there," along with an offer for a free 12-issue subscription to Bloomberg Businessweek. A Guardian article from 2012 read: "Still living with your parents at 30? Get a life."

When the cost of living and housing is so high, everyone gets it.

Gen Z, however, has gotten off much more lightly. At 24, Amy Lewthwaite has never left her family home in southwest London. At the moment, she's able to save 30% of her monthly income as a social worker and considering buying a property with her sister in a year or two. For people like Lewthwaite, living with Mom and Dad is often peddled as a smart financial move given the high cost of housing. In 2020, the Financial Times ran the story, "Why it is cool to move back home with your parents," and a Guardian article from May declared: "'It's a win-win': The adult children living at home."

"If I moved out now and rented somewhere, I wouldn't have any savings," Lewthwaite told me. "I would have spent it all on rent."

In the Bloomberg-Harris Poll survey found, 40% of young people said they felt happy to be living at home, while one-third said they felt smart for making the choice to live with family. And 87% said they thought people shouldn't be judged for living at home. "I've never had any negative opinions about it, even from older generations," Clark told me. "When the cost of living and housing is so high, everyone gets it."

Not everyone is on board, though. In a Pew survey conducted in October 2021, more than one-third of Americans said they thought it was bad for society for young adults to live with their parents. Only 16% said it was a good thing. With sky-high rent prices, many young people feel like they have no choice, but whether living at home actually works in their favor is a different question.

A 2019 report from the Urban Institute found that those who lived with their parents between the ages of 25 and 34 were significantly less likely to be homeowners 10 years later. The research compared people who had rented or purchased their own place with those who were living with their parents. It found that after a decade, 32% of young adults who initially lived with their parents had still not achieved independent living, while nearly all previous renters and homeowners had.

For those who did buy a home after living with their parents, it doesn't seem like they had any kind of leg up. The median home values were consistent regardless of their living arrangement a decade earlier: Both groups reported median home values between $200,000 and $210,000.

Then there is the emotional burden. Sarah Obutor moved back into her family home in Georgia after being forced to take medical leave from college because of her mental health. At 20, she feels the cost of being stuck at home. "They still sort of see you as a child, no matter how old you are," she said. Her two older siblings, 27 and 29, are also living at home, but Obutor can't wait to get out. She plans on going back to college in the fall and intends to live on campus. Her hope is that once she graduates, she will be able to find a place on her own.

Your 20s used to be the time where you committed to marriage or raising young children. Now those responsibilities don't come for most people until almost a decade later.

In research conducted in 2017, those who had boomeranged to their parental home reported significantly higher levels of depressive symptoms. A study from 2022 found additional time spent with parents or family could cause tension with those who'd moved back home. "If you live with your family, you still want to be yourself," Prabash Edirisingha, an assistant professor in consumer culture and marketing at Northumbria University, said. "Part of that is having interpersonal boundaries and personal space. In a multigenerational family, especially if you're living in a cramped, crowded space, it's going to be very tough."

For many young adults, living on your own is an important step to feeling grown up. In another study from 2022, researchers found that people who had to move back in with their parents during the pandemic felt like it was a big setback in feeling like they had grown up. "You can't do all the things that you would want to do even though you are an adult," Obutor told me.

Lewthwaite agreed: "When you live with your parents, you don't have space to do more adult things, like hosting a dinner party or having a wine and cheese night."

As important life milestones — such as moving out, buying a home, and having children — get pushed down the road, Gen Zers can feel like they are falling behind. In a 2022 survey conducted by the UK-based relationship-support network Relate, 83% of Gen Zers said they felt pressured to reach key milestones, compared with 77% of millennials and 66% of people over 75 who said they had felt this way when they were younger.

For Gen Z, the very concept of adulthood is shifting. Jeffrey Jensen Arnett, a psychology professor at Clark University, told me that young people were experiencing a new life stage, which he called "emerging adulthood." "Your 20s used to be the time where you committed to marriage or raising young children," Arnett said. "Now those responsibilities don't come for most people until almost a decade later."

After speaking with young people who still live with their parents, Arnett said: "Most of them have that sense of it being in between stages of life." The pursuit of independence and the ability to shape one's own life away from the family home is now commencing at increasingly later stages.

"It doesn't mean they're lazy. It doesn't mean they don't want to grow up. It doesn't mean they're avoiding the responsibilities of adulthood," Arnett said. "It just means that times have changed."

Still, the change isn't entirely positive; instead of choosing to live at home longer, most young people are forced into the situation. Skyrocketing housing costs and stagnant wages have made independence a luxury that many young people simply can't afford. As one person on X put it, "Living in your parent's house is free because you pay with your soul."

Eve Upton-Clark is a features writer covering culture and society.

Subscribe to Business Insider's Financial Insights Newsletter

This Business Insider article was legally licensed by AdvisorStream

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting