There's something to be said for living with mom and dad.
In fact, more and more young adults are opting to do just that thanks to things like student loan debt and high rents.
Yet, there comes a time when they need to strike out on their own and become financially independent.
Stephanie Einseberg is working towards that goal. She moved in with her parents after graduating from New York's Binghamton University in December 2017. More than two years later, she's still in her parents' White Plains, N.Y. home.
"I would love to move to Manhattan and get a roommate, but it's also extremely expensive," the 24-year-old freelance graphic designer said.
She's not alone. More than 14 million millennials still live with one or both parents, according to a 2019 survey by real estate website Zillow. It's the highest share for the age group since at least 2000.
Another 2019 study, by TD Ameritrade, found that 50% of young millennials planned to move back home with their parents after college.
The return home can be a good opportunity for young adults to get on their feet and come up with a financial plan so that they can eventually leave the nest.
"When I first moved home, I realized how important it is to save up," Einseberg said.
"I would have to sacrifice going out with my friends, going for food, going to the movies, going wherever my friends want to go in order to finally reach my goal."
Here are strategies to help you, or your child, become financially independent.
Build a budget
The first thing you should think about is your budget.
Make a list of the money coming in, such as your salary, as well as your expenses — like credit card and student loan bills, car payments and your phone bill. Differentiate from your wants, like eating out, and your needs, like your car and phone. Also, note what you are putting aside every month into a savings account and a retirement account.
Add up your expenses and deduct it from your post-tax income.
If you are spending more than you make, or you need to trim down expenses in order to save up for the big move, there are some tricks to help you get on track.
Start by going over your list and challenging every expense. Decide what you really need, and what you don't. Then, rein in your impulse buys. Before making a purchase, ask yourself if you really need it, how you will pay for it and if it can wait. Finally, try using cash only, or a debit card, for a month to cut down on credit card bills.
Tackle debt
Borrowing money isn't necessarily a bad thing. As long as you pay your bills on time, you'll be building a positive credit history.
However, too much debt can be detrimental to your financial success. That means you need to come up with a strategy to start paying it down.
"You have to have a plan," said Lawrence Sprung, certified financial planner at Mitlin Financial.
"Where is the highest interest rates? Where is the biggest impact that you can make on that debt?" he added. "Start chipping away at it slowly but surely."
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Rank your debt from the highest to lowest interest rates and start paying them off in that order. Cut down on your credit card use and try to negotiate a lower interest rate with your current credit card company.
If that does work, try to get a card with a lower annual percentage rate (APR) and do a balance transfer. You could even consolidate all your credit cards to one with a lower rate.
Also, keep track of your due dates so you don't rack up late fees and try to pay more than the minimum amount due.
Save and invest
Saving for emergencies and for your retirement is vital. Yet it may seem overwhelming, especially if you have large bills and are living paycheck to paycheck.
So, try to build it into your budget.
"We tend to be creatures of habit," Sprung said.
"It's really just getting into the habit and the mindset of paying yourself first," he added. "It's amazing how you can then rectify the rest of your budget around what's leftover."
Certified financial planner Liz Frazier Peck, author of "Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance," advises starting with your emergency fund first, so that you don't go into debt if something happens, like a large car repair bill.
When it comes to investing for your retirement, it's important to be consistent, she said. If your company offers a 401(k), start contributing. If not, open a traditional IRA or Roth IRA. Then automate your contributions.
Most importantly, if you have a 401(k), check with your employer to see if it provides matching contributions. Try to max out your contribution to what your employer matches. If not, you are leaving free money on the table.
"Do what you can. Just start," Peck said.
"If you put these limits on you that, 'Well I have to be able to do 6% or 10%', you might not get started," she added. "If you can do 1% right now, if you can do $20, that's something."
Remember, the earlier you start, the better off you will be thanks to compound interest, or earning interest on your interest.
For example, to get to $1 million in your retirement account, you'll have to sock away $319 a month if you are 20-years old, according to NerdWallet. The calculation assumes you have no money in savings, get 6% annual returns on your investment and retire at age 67. If you start at age 30, you'll have to set aside $613 a month to reach that goal. At age 40, it jumps to $1240 and at age 50, you'll have to save $2831 monthly.
How parents can help
The earlier parents start helping their kids understand how to manage their money, the better, even when they are teens with summer jobs.
However, if you haven't done so and are now living at home with your twenty-something, it's not too late.
"Start eliminating your [financial] involvement in the child's life," Sprung said. "Have them start taking ownership of things — maybe not everything at once — but slowly but surely taking responsibility of certain bills [and] expenses."
In the end, it's all about building healthy habits.
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