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5 money rules when parents are your roommates

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By Andrew Housser

Some assume that millennials who live with their parents are spoiled. But for many, the reality is different. This year, for the first time since 1880, more 18- to 34-year- olds live with their parents than with a spouse or partner. The 2014 Census reported median earnings for millennials of about $34,000 per year – less than inflation-adjusted income in the 1980s. It also is less than the average student loan balance of $37,000 for today’s college graduates, three-quarters of whom borrowed to pay for college.

Every millennial living with their parents should consider these five points to keep the household running smoothly – and their own future on track.

1. Formalize the rules. Adult children should take on responsibilities by handling their own laundry, meals and transportation, and helping with housework and yard work. Discuss and agree on house rules. What expenses do you need to share? What are the guidelines for courteous communication when someone is late or will be away? How will you handle overnight guests?

2. Set goals and deadlines. No matter how close the family, living together can become challenging. Parents and young adults alike may long for privacy and independence. As parents age, they may want to downsize, but do not want to leave their adult child out in the cold. When you move in together, discuss and set a target date for leaving. If your situation changes by the time that date arrives, you may want to set a new date, but evaluate what you can do to gain more independence. It is important to keep lines of communication open and keep planning for a productive future.

3. Discuss a budget. Only 65 percent of millennials were employed at the 2014 Census. Even among those who have jobs, some are underemployed. While living at home saves money for the young adult, it adds to parents’ expenses. To help contribute your share, it is smart to find a job doing just about anything while you look for work that will allow you to be financially independent. Be honest about monthly expenses – including student loans, cell phone, car payment, credit cards and a contribution toward rent. Agree to work toward paying off loans and other debt, and use some of your earnings to build savings.

4. Figure out how to get a degree. Some students begin college – and borrow money accordingly – but never graduate. These students may be burdened with loans, without the ability to earn enough to repay them. If you fall into this group, consider that adults aged 25-32 with a college degree earn an average of $17,000 more per year than same-age adults who do not have a college education. If you decide to go this route, take some time to plan your course of education. Avoid private student loans if at all possible. Determine if you can work instead of borrowing to pay for your education – or find an employer that offers tuition reimbursement.

5. Get out of debt now. Although another stereotype says that millennials do not use credit cards, this does not mean they have a good fiscal record. In fact, this spring, credit bureau TransUnion reported that 43 percent of adults aged 18-36 have poor credit. In part, this is because millennials have a shorter credit history. But if you have accumulated too much credit card or other unsecured debt to manage on your current income, seek help. Talk with a financial advisor, or discuss options with a reputable debt relief firm. The sooner you make a fresh start, the sooner you can get on with your life.

Recent analysis shows that more millennials live with their parents not just because of the economy or debt. The biggest trend toward living with parents may be because fewer young adults live with a romantic partner. In fact, Pew Research estimates that as many as one in four young adults may never marry.

Whether they will eventually cohabit with a partner or not, every young adult needs to plan financially for their own future. Each individual living with parents now should make a financial plan that takes into account the ability to live on their own (paying their own rent and/or saving to buy their own home) and funding retirement.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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