I wrote a book just over a decade ago called How Not to Move Back in With Your Parents: The Young Person’s Guide to Financial Empowerment.
I’d retitle the book, if published today, as follows: How to Move Back in With Your Parents. Rent increases are oppressive these days and young people need relief. There are only a few realistic options – move to a cheaper city or a suburb, find roommates or move back in with your parents.
My book was written at a time when young people were moving back home as a result of an economic slowdown and tough job market. Moving home was seen as kind of sad back then, but necessary and practical for some. Today, if you’re fortunate enough to have a favourable family situation, moving back home offers a near-ideal solution to unaffordable rents.
You can see the rent problem clearly in this chart from BMO Capital Markets. As BMO put it, “rents are the new villain in the inflation saga.”
The Globe and Mail’s Stress Test personal finance podcast for Gen Z and millennials recently looked at how expensive rents are causing people to live with roommates well past the usual age for that sort of thing. Having roommates means big-time compromises, but so does moving back in with your parents.
The big advantage for moving back home: You cut your accommodation expenses to the minimum, even if your parents charge you a token rent. Rentals.ca says the average two-bedroom apartment rent is $2,329, which is still a hefty $1,164.50 when divided by two.
If you moved back home and paid your parents $400 per month for rent, groceries and utilities, you’d still be ahead by $764.50 per month. You could save that money for a down payment on a condo, or build a fund to help cover rental costs when you move out at a future date. Think of moving back home as a pit stop on your way to affordable housing.
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Rob’s personal finance reading list
High level hotel hacks
A great list of ways to make a hotel stays more convenient and comfortable, including one to address noise in hotel corridors. Now, for a list of 25 money-saving travel trips, including one I use all the time when renting a vehicle.
So much for the 8 per cent retirement rule
The U.S. personal finance guy Dave Ramsay recently started an argument by recommending people hold 100 per cent of their retirement savings in stocks, thereby allowing them to withdraw 8 per cent of their holdings per year. Here’s some analysis by Morningstar, an independent investment research company, on this idea. Also, a look at the latest thinking on the usual default withdrawal rate of 4 per cent.
Now’s a good time for a TFSA withdrawal
Tax-free savings accounts have been around since 2009, but people still get tripped up by the recontribution rules. Tip: If you withdraw money from a TFSA at year end, you can recontribute it in the new year.
So long, Mint
Quite a few readers have asked for alternatives to the budgeting app Mint, which is being discontinued as a result of a big decline in users. I included a list of other budgeting apps in a recent newsletter, and then I came across this analysis of why Mint hasn’t flourished. What people want from personal finance apps is “performance,” which means they accomplish a specific task. Users are less interested in insights on where their money goes.
Q: My advisers are moving from one investment dealer to another. Should I go along with them?
A: The important relationship is with your adviser, not his or her employer. So, if you’re happy with the service and value for the fees you pay, it makes sense to follow your adviser to the new company. Otherwise, you have an opportunity for a reset with a new adviser at your existing investment company, or elsewhere.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, explainers, guides and charts
A global stock market chart showing the share of Canada, the United States and others. A great argument for diversification.
The Money-Free Zone
I’m going to keep mentioning songs from the 1970s soul-folk musician Terry Callier until the world remembers how great he was. Here’s one of his best, You Goin’ Miss Your Candyman.
Listen to this
The Mastering Money podcast from CPA Canada, representing accountants, covers the job market in its latest season. Included are segments on compensation and future-proofing your career.
On social media
Rent increases shown in graphic form. Just brutal.
In case you missed these Globe and Mail personal finance-related stories
- Toronto gym receptionist earning $32,000, with consumer debt and ‘meagre’ savings, feels anxious about the future
- Millennials whose parents owned a home twice as likely to be homeowners: Statistics Canada
- The fall economic statement from my own family’s household ain’t pretty
- Subsidies to rich seniors make no sense
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home down payment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle