Young adults aren't looking on craigslist for a roommate—they’re turning to their only option: mom and dad.
A new study by the U.S. Census Bureau shows that more members of Generation Y—those in the 25-to-34-year old age bracket—are living at home with their parents. From 2005 to 2011, the number of Generation Y males living at home increased to 19% from 14%, according to the study, America’s Families and Living Arrangements: 2011. Similarly, the number of young women returning to the nest rose to 10% from 8% in the last six years.
With the unemployment rate currently at 9%, the weak labor market is a key reason for more young people returning to the nest. But it’s not the only reason. Fear over the state of the economy may have more to do with a child’s return home than their inability to get a job, according to Dr. Travis Heath, a psychologist at the Metropolitan State College of Denver.
“Where do we feel safe psychologically? For most young adults all they have ever known is their parents’ home, and returning to the nest makes the future seem a little brighter,” says Heath. “And for many families it can be a positive thing, but the onus is on the parents to make sure the child is progressing, and not just stagnating in their childhood home.”
The question for many parents is no longer whether or not to allow children to return home, but rather how long to let them stay there before insisting they find a job.
“It’s wonderful when good parents provide structure and help the child move toward securing a job, but there are some parents who are enablers and let their children set up shop as long as they want. If that happens, the child may never be able to survive on their own,” says Heath.
Government data also revealed that 59% of men ages 18 to 24 currently live with mom and dad, an increase from 53% in 2005. Likewise, 50% of 18-to-24-year old women currently live at home, an increase from 46%. However, those numbers also include children who are attending college and may be living in dorms most of the year.
But even for children in college, living with parents and saving money may mean a shift in the way Generation Y spends and saves for the rest of their lives.
“People who lived through the Depression continued saving and remained fiscally responsible for the rest of their lives,” says Heath. “This generation is learning to be more frugal and more cautious, and it could make for a few decades that are much different than recent ones. Will these kids be willing to make investments in real estate or the stock market the way people did in the past? I don’t know.”
Heath says that while many Gen-Yers may be saving every penny and working toward paying off student loans, others could easily be planning to live off mom and dad for as long as possible, getting “fat and happy,” and enjoying their time out of the work force.
“It’s up to the parents to educate the kids and make them consider where their money is going now, and the type of consumers they are going to be in the future,” says Heath. “The kids who learn now how to build a nest egg are going to have an advantage in years to come.”