With a lot of emphasis being placed on savings, you maybe asking yourself why the topic has become so popular in recent times and why there is so much pressure to save money. Why should you worry about putting aside some of the money each month?
So you are at a stage in your life where living on your own is everything or you have just recently graduated, and you are ready to face the adult world or ready to start your life as an independent adult. But if you deeply think about it: Living on your own is a challenge and can turn out to be quite expensive with the cost of living rising year on year. And even if you managed to secure a job, the entry-level salary and lack of significant savings might make it hard to keep up with all your living cost. Also, soaring rent prices and the huge amount of money required for a deposit on house has become very difficult or almost impossible for many people to get on the housing ladder.
The obvious solution is staying at home or you could always move back in with your parents. Although staying at home could mean sacrificing a level of independence, but if you can save-up for a deposit for your first home, or whatever future plans you have, it can be the best money decision you ever make.
Having graduated from university a few years ago without securing a permanent job, zero savings and an overdraft over £2000, I had no choice but to move back in with my parents. From a financial perspective, I wouldn’t have been able to pay back my overdraft quickly and kick start my savings. In other words, I wouldn’t have been able to do everything I have done if I had not moved back home. There is a real possibility that my financial situation would spiralled out off control, I could have ended up with huge amounts of overdraft charges or worse, fall into debt. Fortunately, I had the option to stay at home while improving my financial situation. This would have not been possible if I was living on my own and paying rent as well as bills. This is the reason why spending some time living at home with parents if you have the option can be beneficial and may possibly turn out to be the best financial decision you have ever made. The reasons below outline the advantages of living with your parents against renting your own place.
Reduced Living Costs
The most obvious advantage of living with your parents at home is that you will probably benefit from reduced living costs (rent, bills and food) giving you a greater financial security and a better chance of saving more money you would otherwise not get while renting your own place. You can save money by paying less rent and utilities (gas, electricity, internet). Since moving back home my outgoings have dropped down considerably. My rent is £150, utilities are around £50 which includes gas, electricity, water and internet. My phone bill is only £15, and my travel is £72. This brings down my total monthly outgoings to £287, which is not a lot when compared to renting my own place which would cost me £600 on rent alone in the city, I live in. Because my expenses are very low it makes it much easier to save large sums of money regularly.
You Can Kick Start Your Savings
Living at home can help you start saving money so you can build up an emergency fund and lay down a strong foundation to sustainably support yourself in the future. When it comes to saving time is not your best friend therefore, you need to start saving as much as you can as early as possible. The more money you save now the higher the returns you are likely to get from interest rates and the less money you have to save in the future. As my living cost are low I have been able to save at £500 each month. I have been to save that much because living at home frees up rent money which is usually your biggest expense.
Pay off Overdraft, Credit Card or Loan
As a university student I racked up to £2000 in student overdraft and paying off as early as possible was crucial to avoid interest rate charges. If you owe any form of credit it is very important that you pay it back in full as soon as possible to avoid interest rate charges or any penalties for not paying pack the credit within the agreed time frame. Living at home with parents does not only allow you to make those minimum payments affordable but may in fact enable you to put more money toward your debt allowing you to settle it quickly. Paying more than the minimum affordable payments can help you cut down on interest you pay which in turns allows you to settle the balance on the account early therefore, you won’t have to pay a lot of interest.
You Can Afford to Take Risks: Investment or Starting a Business
Living with your parents is very advantageous, it’s a smart way to get rid of debts and start savings. The main advantage that many people doesn’t realise is that living at home affords you the privilege to take chances and risks. Keeping your costs under control means you don’t have to take just any job, giving you better flexibility when making your next career move. You also won’t have to move into a less-than-ideal place because that’s all you can afford but instead you can live in the comfort of your childhood house.
Living with my parents has allowed me to be more strategic in making my next career move, because there is no rush in getting any new job i can find with a higher salary. I have been able to critically analyse different career opportunities without any pressure to ensure I make the correct career move. If you are someone who is looking to start a business or make investment this can be made possible because living at home gives you a safety net to take your time when making decisions, try new things or take risks without worrying about it putting you into financial difficulty
Important Information To Note
If you are looking to start saving and you want more information about different types of savings accounts, read our article on What are the Different Types of Savings Accounts?
If you are in financial difficulty or you are struggling with debt, make sure you seek expert advice. Visit Money Advice Service, an independent service set up to help people manage their money. All the organisation recommend by Money Advice Service offers services which are free, confidential and hold a standard accredited by the Money Advice Service.