Living with Mom and Dad: 5 Rules

Last Updated May 21, 2010 4:09 PM EDT

Blame it on the lack of jobs and sky-high debt loads: Last year nearly half of all college graduates returned home for an indefinite stay. Among them: 22-year-old Andrew Rickelman. After graduating from the University of North Carolina last year in 2009, he continues to reoccupy his old bedroom at mom and dad's in Charlotte, N.C.

Sure, living with the folks can cramp your style. But boomeranging - or moving back home after college - can also boost your bank account and offer a fast track towards financial independence.

Here's how to make the most of the otherwise less-than-socially-ideal situation.

1. Have an Exit Strategy
It's key to create realistic goals for yourself, including a move-out date. It'll keep you focused and motivated to get on your own two feet sooner rather than later. Andrew already knows his last day at home will be next April, right before he gets married. At that point he'll have lived at home for about two years - a little longer than some would like, but a great opportunity to save up. "It makes good financial sense for me and my future family," he says. Keep in mind that the average job hunt is taking about four months, so if your plan is to stay with mom and dad until you find work, you could be home for at least one season.

2. Earn Your Keep
Yes, it's your old bed, but you're an adult now and that means paying your own way. Trust me, your parents will be impressed by your suggestion of chipping in and helping with the mortgage or rent, whatever you can reasonably afford. Some parents may push back at the idea - but insist to help in some way shape or form. If you don't have a job, devise a bartering arrangement where you perform certain household duties like gardening, cleaning and cooking twice a week in exchange for living at home.


3. Save Up and Pay It Down
It's no secret living at home is a major cost-saver, so milk it for all it's worth. Even if you're paying your parents some rent - you'll pay a lot less than the going market rental rates. Andrew says he's pocketing 40 percent of his take-home pay of about $30,000 a year. That's an annual $12,000 savings, which he uses to pay down student and auto loans and to bulk up his savings accounts.

4. Be Respectful

No one said this was going to be a joy ride. Just keep in mind how much you're saving. And remember - it's just temporary. "Socially it has been tough," Andrew tells me about his time at home. "There's very little privacy for my fiancée and I, especially since she lives with her parents as well. Also, I feel embarrassed when I can't invite friends over to my place to hang out ... My folks don't contribute well to a let-go-and-party atmosphere."

His advice: Keep lines of communication open, and respect your parents' rules. If you're going to be late coming home, make sure you tell your parents. (They still worry about you and probably appreciate knowing your whereabouts.) And remember that your parents' home is not a frat (or sorority) house: It's probably not cool to have your friends over late at night and throw parties.

5. Ask for Advice

Your parents are major sources of knowledge, especially when it comes to helping you navigate your finances. Their experiences can really help you stay on the right track, whether you're dealing with student loans or credit card debt.

Talk about the different approaches you can take to paying down outstanding debt. Make phone calls together to creditors and lenders to review your payment options. Take a trip together to the local credit union and learn about what kind of financial help you can get there. And finally, if you're looking for a new job, see if they can refer you to people in your network and keep an eye out for entry-level openings. In this economy, anything helps!

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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.

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