With inflation soaring this year, I'm sure a lot of you have thought about moving back home with your parents to save money. For me, it's crossed my mind a few times.

But is it actually worth it?

Recently, I wrote a post about why I'm choosing to rent instead of own a house. My decision to rent was based on my values, like owning my time, having predictable payments, and keeping maintenance costs low.

Housing shouldn't strictly be a financial decision. Whether you're debating between renting vs. owning or living on your own vs. moving back home, it's a lifestyle choice.

The environment that you put yourself in influences your mood, your daily routine, and your habits, all of which should be factored into your decision along with your financial situation.

So, now let's look at the pros and cons of moving back in with your parents.

Pro: You can pay off debt quicker

As of 2022, the average student loan debt in the United States was $37,338.

If you're a new college graduate, you'll likely have an average starting salary of around $58,862 per year and average living expenses of around $44,312. After taxes, you're living paycheck-to-paycheck for the first few years of your career.

At this rate, you're unlikely to be able to chip away at your student loans, at least not without a salary increase or sharing expenses with roommates.

So moving back to your parents' place can be viewed as necessary to get ahead as long as they won't charge you rent. Or if they do, it's below the market rate. Otherwise, it wouldn't make much financial sense to move back in.

Pro: You can save up for an emergency fund or down payment

If you move back in with your parents, you're ideally cutting a significant portion of your living expenses. With the amount that you otherwise would have paid to your landlord, or worse, the government, you can set it aside for an emergency fund, so that you can move out on your own again.

Depending on your area, landlords will want a few months, and in some cases, up to a year, of rent as a deposit. Without that chunk of change, there's little you can do to rent a place on your own.

If your goal is to save up to eventually purchase a house, expect to live longer with your parents. Homeownership comes with many added expenses, such as maintenance fees, property taxes, and general upkeep.

Pro: You have a safety net after getting laid off

No one expects to get laid off. But if you ever find yourself without a job, it's easy to start worrying about the future. How long will you be able to survive until you run out of savings? When will you have paychecks coming in again? Should you move back home with your parents until you find your next job?

Moving in with your folks can extend your runway by cutting out housing expenses. This could give you more breathing room to land a job offer. Layoffs often happen during times of economic hardship, which can lead to a tightening labor market. Having the burden of paying rent or a mortgage off of your back can help you be more aggressive with your job search.

Pro: You can start a business with minimal overhead

If you're looking to make the jump into entrepreneurship, you likely won't be making significant income (if any) in the first few years. Experts recommend testing out your ideas on the side while keeping your 9-to-5 job if your time allows it. This can enable you to be more creative with your venture, knowing that if it doesn't pan out, you still have employment income to fall back on.

Otherwise, moving back in with your parents could be a viable safety net if you simply can't work on building your business while maintaining a full-time job. However, consider how the move could affect your motivation, ambition, or drive to go after the business opportunity.

Pro: You're closer to family

Surrounding yourself with loved ones can have a significant impact on your personal life. Loneliness has become an epidemic that can negatively affect your mental and physical health. Having a community of people around you that you can talk to, lean on, and share experiences with can do wonders by increasing social connection and support.

Con: You're closer to family

Depending on your personal situation and family dynamic, being closer to home isn't always a positive outcome. For some, moving back in with their parents sucks. Some parents foster a toxic environment for their children that can add stress and negativity to their lives. This can often lead to depression, anxiety, and other mental health problems.

Any financial benefits you may get from moving back home will be negated by the toll on your mental health. So think carefully about the realistic circumstances that you might face if your family values don't align.

Con: You can lose your freedom

Some parents may continue to be overbearing as their children enter adulthood. If your parents are strict about house rules, like curfews, chores, and other expectations, you can easily lose the sense of freedom and individuality that you had while living on your own.

It can feel similar to living with your landlord. You always have someone looking over your shoulder and are never able to feel fully at peace. This can feel like you're "moving backward" in life, as you have less control and autonomy.

If your parents guilt you into following certain rules that take away your freedom simply because they're not charging you rent, it might not be a good idea to move back home. Think about how this can affect your social or dating life and if it aligns with your near-term goals.

Con: You can lose motivation

The safety of having a warm place to sleep at night is good for peace of mind. But it can be easy to get too comfortable after moving back in with your parents because of your lowered financial responsibilities. This can cause you to lose motivation and fall into a downward spiral in life.

If you decide to move back under your parents' roof, remind yourself of why you're there and what your end goal is, whether it's changing your career, finding a new job after getting laid off, or starting your business.

Con: You can start overspending

In a similar vein, your lack of bills to pay can lead to impulse spending. Lowering your fixed expenses, like housing or groceries, will result in additional discretionary income. You might think it's okay to spend a little more on luxuries, like eating out or buying clothes, but that extra cash flow should be going towards building up your savings and investments.

If you increase your lifestyle simply due to not having the financial burden of housing payments, you can start to build unhealthy financial habits. This might lead to consistently overspending in areas where you typically spend less, such as alcohol, entertainment, or hobbies. Poor spending habits are hard to break once they're engrained in your behavior and can set you back in your financial journey.

Create an action plan

After considering the pros and cons, you might decide that moving back home with your parents will help you save money and achieve your near-term goals. Before you pack all of your belongings, create an action plan that outlines your end goal and what you'll do to get there.

Set a SMART goal

You don't want to be living with your parents forever, I assume. For your stay to be productive and ensure that you don't overstay your welcome, set a goal for yourself that's:

• Specific
• Measurable
• Achievable
• Relevant
• Time-Bound

Example goal for someone who was laid off

I will secure a new full-time job in my field within the next six months by applying to at least five job opportunities per week, attending networking events, and improving my skills through online courses.

Example goal for someone with student loans

I will pay off $20,000 in student loans within the next twelve months by working five extra shifts per month, allocating that income towards additional student loan payments, and reducing entertainment expenses to $50 per month.

Set ground rules and expectations

You'll essentially be living with "roommates" again, except that they're also your parents. Like with any cohabitation agreement, ground rules should be set to level out expectations, such as:

Timeline

Based on your SMART goal, set clear expectations about how long you plan on staying and what you'll be doing during your stay. Moving back in with your parents is also an adjustment for them, so outlining your estimated timeline can give them peace of mind that you won't be living with them forever.

Financial contributions

Clarify who will be paying for what, including rent (if any), utility bills, grocery bills, gas, and other financial considerations. This can prevent potential arguments or misunderstandings down the road that could lead to anger or resentment.

Household chores

Collectively define responsibilities around the house, like cooking, cleaning, and grocery shopping, so that as adults, you understand what your expectations are within the household. Will you eat meals together or separately? Hold each other accountable for their respective chores by establishing a schedule or rotation to ensure fairness. This will help keep the household from entering into chaos.

Guests and privacy

Your parents might revert their behavior to when you were still a kid. As an adult, it's important to set boundaries for privacy that are respected. This can include times when you want to be left undisturbed, such as during working hours, or how often guests are allowed over and for how long. Consider how the rules agreed upon will affect your social and dating life if that is of concern to you.

Alternative options

Whether you're tight on money or swimming in debt, moving back home with your parents isn't always the best or only option.

Conduct a financial audit

Set some time aside to conduct an audit of your finances. Review your monthly budget and look for realistic ways that you can scale back your spending for the time being. Whether it's eating out less, canceling subscriptions, or only driving when necessary, these are a few sacrifices to consider until you reach your end goal.

Share housing with roommates

It might not be the most glamorous decision, but the financial benefits of sharing a house or apartment with roommates are massive. It will lower your biggest fixed expense, allowing you to increase your savings and feel more financially secure.

If you already own a place, consider renting out your basement or an extra room to a tenant. This will bring in some additional income from space that you might not be using.

Downsize your housing costs

Housing is the biggest fixed expense for most people. If you currently live in a high-cost-of-living area, such as New York, Singapore, or Vancouver, consider relocating to a different neighborhood where housing is more affordable. If you work remotely, you might be able to move to a different city or state altogether while keeping your job.

Another option is to get a smaller place. Perhaps you upgraded to a bigger apartment while rents were cheaper, but now they've become unaffordable. Or your kids have left the house and you're left with a few empty rooms. Downsizing can not only benefit you financially but can free you from material possessions or junk that have been weighing you down.

Start a side hustle

Don't discount the impact that side hustle can have on your finances. Earning a few extra hundred bucks a month can make a difference in your budget. If you're not interested in picking up a traditional part-time job, apps like Uber, DoorDash, and TaskRabbit have made it relatively easy for the average person to participate in the sharing economy to earn side income.

On the other hand, successfully creating your own side hustle largely depends on your circle of competence. Think about the unique talents, skills, knowledge, or passion you have that you can lean into and monetize. You can try your hand at freelancing, although it's not as glamorous as it may seem.

Side hustles are also a great way to diversify your income streams, so in the case that you lose your job, at least you'll have some money coming in to keep your life going.

So should you move back home with your parents to save money?

The verdict: It's a personal decision.

When it comes to where you live, you should consider both your finances and your values. If you or your parents aren't willing to make certain compromises to live together, then moving back in might not be such a good idea.

However, if you are on good terms with your parents and they give you the freedom, privacy, and respect to thrive in your own space under their roof, then, by all means, go for it. Just be prepared for a lifestyle adjustment.

Everyone's situation is unique and you know yourself the best, so it's ultimately your decision whether or not to move back home with your parents.

Regardless, stay focused on your end goal.

Things will get better if you don't give up.