Clay Jarvis
Beth Buczynski
Interest rates may be receding, but those whose finances have been washed out by rising rents, food costs and credit card balances are still struggling to keep afloat.
Some younger Canadians are reaching for a life preserver by moving back home with their parents. In February 2024, a Credit Counselling Society survey found that 11% of Canadians aged 18-34 who experienced debt increases in the previous year had already made such a move. Another 13% of this cohort said that returning home was a significant possibility if inflationary pressures continue.
The financial arguments for moving home are pretty compelling. Lower costs create an opportunity to save money and pay down debt, while the support and comfort that can come from living with family might be exactly what you need to figure out your next move.
But there’s a lot to think about before boxing up your stuff and heading home. Here are four questions to answer before you call the movers.
1. Why am I in this situation?
Even if you have good financial habits, the past several years of inflation may have eroded your savings or forced you to rely on your credit cards more than usual. In this case, you shouldn’t have to make many adjustments once you move home. It’ll mostly be a matter of staying the course and using your increased savings to gradually ease your financial burden.
But if your current situation has been shaped by unnecessary expenses, your time at home should include efforts to reshape your spending habits. This might be easier if your parents live an inconvenient distance from your normal social circle; not so much if you’re a frequent online shopper. In either case, think critically about what’s fuelling your urge to spend.
“Are you boredom shopping? Are you being influenced by Instagram? Understand the role different influences are having on your spending and cut them out a little bit, or just recognize that and see if you can substitute the behaviour,” says Anne Arbour, a financial educator for the Credit Counselling Society in Toronto.
There’s no point moving home to save money if you’re just going to continue the lifestyle you already can’t afford. A better goal might be emerging from your parents’ place in better financial shape and as a more mindful consumer.
2. What am I saving up for?
If moving home reduces or eliminates your rent expenses, you could have hundreds or thousands of additional dollars at your disposal each month.
Besides paying down debt, what are your other plans for this windfall? Are you saving a down payment for a house or a car? Do you want to replenish your emergency fund, ramp up your retirement savings or start investing?
Regardless of the goal, you’ll want to work out a savings plan that you can stick to. Arbour says handing a portion of your paycheque to your folks each month and having them return the total when you’re ready to leave is one way to stay the course.
Steve Bridge, an advice-only certified financial planner with Money Coaches Canada, suggests opening separate savings accounts and giving each one a name that reflects the goal it’s funding, like “Honeymoon Money” or “Down Payment Fund.”
“That ties it more closely psychologically to that goal as opposed to ‘savings account 054’ or whatever it is,” he says.
Bridge also suggests putting a time limit on your stay, if possible.
“Having that end date makes it really easy to say, ‘Okay, I need $12,000 in 12 months. That’s $1,000 a month and then I’m out of here.’ I think not having a time frame opens you up to, five years later, you’re still there, and nobody’s happy,” he says.
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3. Can my family’s finances handle this?
Your family may be feeling some of the same financial pressure you are, maybe even more so if they’re paying off a large mortgage or home equity line of credit.
A discussion around you moving back home should focus on how it might affect your parents’ finances. Even if they downplay the cost, consider offering a few suggestions for how you plan to chip in, like contributing to their mortgage/rent payment, paying the utility bills or pitching in on groceries. (Don’t forget to account for this money in your savings plan.)
Bridge says to set expectations around non-financial factors, like chores, cooking duties and vehicle sharing, too, which can prevent unnecessary tensions from arising.
Even if your parents refuse your financial help, it can be an excellent opportunity to talk to them about how they reached their current level of financial well-being — their investments, savings strategies and approach to budgeting.
If you’ve never talked to your parents about money before, this could be a new bonding experience and a chance to learn something valuable.
4. Where am I headed next?
Moving home might eliminate your past debts and present financial worries, but it should include thinking about the future.
One key consideration is where you plan to live once you’re on your own again. Earmarking some of your savings for a large deposit can help cushion the blow of returning to the rental market. If high rent was a factor in your present difficulties, it might be time to weigh moving to a less expensive location or finding a roommate to keep your housing costs low.
Being at home can also be an opportunity to look for a better paying job, start a side hustle or explore new training or educational options that increase your earning power. You can also enroll in a financial literacy course or sign up for free, confidential financial counselling to strengthen your money management skills.
Some might consider moving home a step backward. Think of it more as a detour: a brief, possibly inconvenient necessity that helps rebuild the road to financial independence.
“You didn’t learn to walk without falling down and skinning your knee a couple times,” Arbour says. “If that’s what it takes with money, better to learn those lessons earlier than later.”
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