More and more young people are finding that living with their parents is the best financial decision, but is that a bad thing?

The last time it was in the news that young people were moving back to their hometowns, it sparked a lot of ridicule.

Remember “failed independence” and “the boomerang kids”? Those clichés about millennials lazing around in their parents’ basements, probably addicted to video games. It took society years to accept that moving back home was a response to the tough economic times that came from the 2008-2009 financial crisis, not a generational failure.

I hope we can be more charitable in assessing the recent return of young people to their families in response to the economic shock caused by the pandemic. An argument can be made that in tough economic times, returning to family homes is a wise choice.

One of the first to spot the latest moving trend is credit reporting company Equifax (EFX-N), which recently singled out young adults as a hotbed of financial stress in the economy.

Equifax can identify multigenerational households by counting the number of people with credit history at the same household address. The latest figures show that 29.2% of households have adult children living with their parents, up from 26.7% a decade ago. In Ontario, 32.8% of households are made up of multiple generations.

“Stress is rising everywhere, but it’s especially prevalent among younger consumers,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada. “We think it’s partly due to factors like the rising cost of living. Younger people tend to have lower incomes, and that’s harder to overcome.”

Oakes said high immigration means more families are traditionally living at home until young people get married or buy their own home, but he noted that a phenomenon is happening across the country, even in areas that haven’t seen much impact from new immigrants to Canada, where the number of adult children living at home is growing.

Examples of financial stressors weighing on Gen Z and Millennials:

• Consumers ages 26 to 35 had the highest nonmortgage delinquency rate in the second quarter, at 1.99 percent, up 21.6 percentage points from the same period last year.
• Delinquency rates on auto loans and lines of credit were especially high among that age group.
• Those under 35 saw the fastest declines in monthly credit card payments.

Oakes said the rising unemployment rate is especially concerning for Gen Z. Canada’s youth unemployment rate hit 14.5% last month, the highest rate in more than a decade excluding the pandemic-induced spike. That’s 2.7 times the unemployment rate for people ages 25 to 54, the highest gap on record, according to BMO Economics.

BMO said the difficulty of buying a home, combined with a weak job market, makes the economic situation for young people as tough as it was in the early 1980s and 1990s.

While lower interest rates will help ease today’s financial stresses, Oakes said the process will be gradual and could take 12 to 18 months to take full effect, meaning more young people will likely move back home to escape the rising costs of rent, groceries and other living expenses, and to save for a down payment on a home.

Society’s attitude towards moving back home is reflected in the title of a book I wrote over 10 years ago called “How to Stay Away: The Ultimate Guide to Financial Independence for Young People”. In the most recent edition of the Carrick on Money newsletter, I half-jokingly said that the latest edition of this book should be titled “How to Move Back Home”.

Gen Z and millennials, especially right now with the rising cost of living, don’t have many levers at their disposal. Those who can cut back on their living expenses have probably already done so. The same goes for finding cheaper housing. Next stop: the family home.

Needless to say, moving back home is an option for those who are fortunate enough to have a happy family, parents who own property, and an extra room. If you are a financially strapped millennial or Gen Z and are in this situation, you may want to toy with the idea of ​​living back home and offer terms like paying a nominal rent and other contributions to the household budget. Parents, you may want to consider bringing your children back home for a period of time if they need support.

Living at home was once an undesirable but practical solution for young people in financial difficulty. Now, let’s just say it’s practical.

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