Living with your parents as a young adult used to be a subject of shame and ridicule. But amid sky-high housing costs, rooming with your Mom and Dad is becoming a common bit of financial advice for Canadians in their mid- to late 20s.
In North Vancouver, Justin Prasad, a 41-year-old financial adviser at BlueShore Financial, isn’t shy about telling clients he lived in his parents’ basement suite throughout his 20s.
By working full-time and saving almost all his earnings, he was able to buy a condo within six years of graduating from college in the early 2000s. Later, he sold it at a profit, which helped him upgrade to a bigger home and eventually buy the detached house his family lives in today.
Thanks to those early savings, “I’m way further ahead financially,” he said.
Today, with rents and house prices that much higher, he often counsels young clients and their parents to consider the same arrangement.
You’ll find the same financial wisdom on TikTok. In Vaughan, Ont., 27-year-old Cassandra Melo has no qualms about revealing to her 125,000 followers that she’s living at home.
Ms. Melo, who works as a registered nurse and supplements her income as a financial influencer, said she’s been able to save almost $150,000 so far.
“I would absolutely have loved to move out by now,” she said. But rents in the Greater Toronto Area are so high, she figures she’d be living paycheque to paycheque if she struck out on her own.
Even splitting the rent with housemates is increasingly expensive. The average monthly rent for a bedroom in a shared home was just under $1,300 a month in Toronto and almost $1,400 in Vancouver, according to data from Rentals.ca and roommate search site Roomies.ca. Even in less costly markets such as Victoria, Hamilton, Kitchener, Ottawa or Halifax, young Canadians are facing rents of about $1,000 for a bedroom.
And that’s to say nothing of renting on your own. The average rent for a one-bedroom apartment is just shy of $2,800 a month in Vancouver, more than $2,500 in Toronto and about $2,000 in many smaller cities in Ontario and B.C., as well as Halifax, according to Rentals.ca figures analyzed by real estate research firm Urbanation.
That’s why living rent-free with Mom and Dad can translate into big savings. For example, imagine a newly minted graduate who starts working at 22 and sets aside the equivalent of the average rent for a room in a shared home every month.
In several large and medium-sized cities examined by The Globe and Mail, that would allow that young Canadian to save about $100,000 by age 30, assuming rents rise 3 per cent a year. In Toronto and Vancouver, where rents are even higher, those savings would amount to almost $140,000 and $150,000, respectively.
In most of the cities The Globe looked at, that cash would be enough for at least a 10-per-cent down payment on a typical home, assuming home prices also rise 3 per cent annually, in line with long-term trends.
Saving for a minimum down payment is significantly harder for young adults in Canada’s priciest markets, where the price of a typical home has crossed – or will likely soon cross – the $1-million mark. That requires 20-per-cent down to qualify for a mortgage. Still, the math can work for a young couple if each partner can live rent-free and save aggressively for the better part of a decade, said Aravind Sithamparapillai, an associate at Ironwood Wealth Management Group.
But the decision to keep sharing living quarters with your parents can’t be just about numbers, Mr. Sithamparapillai cautioned. Even if parents can afford to subsidize their kids with free lodging, there are lifestyle and mental-health considerations to take into account.
He likes to ask some pointed questions to help his clients think through them. Are the parents longing for privacy and alone time after years of child wrangling? Will they find themselves footing the bill for internet services, utilities and groceries as well?
Kids should also consider potential co-habitation woes. TikTok videos describe not being able to pick up online deliveries at the door without parental eyerolls over presumed overspending. Mom and Dad waiting up at night for their 20-something to come home from a date is also a common complaint.
To avoid tension, Mr. Sithamparapillai suggests negotiating ground rules of co-living up front. How much are the kids expected to pitch in and save monthly to enjoy the privilege of living at home? Can parents withhold judgment on other spending as long as their kids pay their share and meet those savings goals?
For her part, Ms. Melo said things have fallen naturally into place for her, her parents and her two adult siblings, who also live at home and work full-time. Everyone buys groceries for everyone, for example, without an explicit agreement to do so, she said.
And while she’d like to move out in a few years, she doesn’t have a concrete plan to do so. For now, her focus is on setting money aside and growing those savings in the stock market.
“If you want to set yourself up for financial success later on in your life, your 20s is almost like a foundational decade to save and invest.”