The best roommates pay the mortgage, let you live rent free, stock the fridge, and sometimes go by ‘Mom’ and ‘Dad’ – at least, that’s the case for the 45% of young Americans (ages 18-29) living with family, reaching levels comparable to the 1940s.¹  

Facing a challenging set of circumstances – from pandemic lockdowns to heightened inflation, steep housing costs, and an uncertain job market – many Gen Zers are sticking close to home. The percentage of adult children living at home surged more than 87% over the past two decades, according to the U.S. Census Bureau.²

Why Gen Z aren’t flying the nest

Building up savings is a top factor for staying put: More than a quarter of young Americans say they've been able to pocket more than $1,000 a month while living with family – and 70% said they wouldn’t be where they are financially if they hadn’t.³

Other reasons why people may opt for multigenerational living include: 

1. Financial safety net: Co-residing enables Gen Zers to keep their expenses manageable and take steps towards reaching their financial goals.
2. Savings opportunity: Amidst high rent costs and elevated mortgage interest rates, living with family helps young Americans accumulate savings that would otherwise be spent on rent.
3. Path to homeownership: Despite housing market hurdles, living at the family home allows Gen Zers to save for their own house down the road. Some are contemplating shared homeownership with family members as a pathway to purchasing: In 2023, 16% of first-time buyers purchased a home with their parents.⁴
4. More manageable expenses: By sharing the costs of grocery and utility bills, young adults can minimize some fixed expenses. 

 Read more: Gen Z and money: Five tips for building your net worth 

For most young adults living with their parents, the top reason is to save money (41%). Others say they can’t afford to live alone (30%), need to pay down debt (19%), or recover financially from emergency costs (16%).

Empower research reveals that 37% of Americans couldn’t handle an unforeseen expense over $400; extended stays at home can help young adults build an emergency fund and get on the path toward Financial Happiness.

Read more: The 50-30-20 budget rule explained

Staying and slaying 

Millennials were the first generation to boomerang home, facing similar struggles to Gen Z in the wake of the Great Recession. 

Gen Z tends to be more open when it comes to discussing money than previous generations. “Loud budgeting” – the practice of frankly sharing budgeting strategies, financial goals, and spending habits – is one example of a financial trend pioneered by Gen Zers looking for ways to be more responsible with their spending habits. 

The bottom line

Almost one third of adults aged 18-34 live at home; for some, that’s not likely to change anytime soon: 41% of adult Gen Z respondents believe they will continue to live with family members for at least another two years.^6,7

For those cohabitating, there are a few ways to foster a financially healthy situation.

• Have the Money Talks: Set clear expectations and boundaries. 

Make a plan that lays out who is responsible for what in the household. Ask what you each want this living arrangement to look like. The plan can detail everything from how you’ll split costs for rent, utilities, groceries and other expenses. Talk not only about the what, but also the when: Discuss specific timelines and milestones, such as how long the child will stay rent-free or how much money they’re expected to save during a given period of time. Knowing where everyone stands at the offset can help prevent miscommunications over time. 

• Be specific about financial responsibilities.

There are many ways that families may choose to allocate financial responsibilities when living together. Parents may ask their adult children to contribute financially by paying a portion of the rent or mortgage, utilities, groceries, and other household expenses. Alternatively, young adults living at home may contribute a percentage of their income towards household expenses, or live rent-free for an agreed-upon period. 

When considering what will work best for your family, be sure to ask about each other’s goals and priorities. For young adults: What are they hoping to accomplish financially by living at home? For older generations: How can they support their children while still meeting their own aspirations? 
 

For many pragmatic young Americans, the allure of a financial safety net and familial support outweighs the pull of independence – at least for the time being.