Dave Ramsey has an explicit message for young people who live with their parents. 3 things you need to do to move forward (and get your own place)

‘Mom can’t protect you’: Dave Ramsey has a candid message for young people who live with their parents. 3 things you need to do to move forward (and get your own place)

More young people are choosing to live at home with their parents – but many are using their rent savings to buy expensive handbags and jewelry instead.

Morgan Stanley analysts say these young adults have more room in their budget for discretionary spending and are helping pay The luxury goods industry boomed.

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Personal finance author and radio host Dave Ramsey criticized the direction on Ramsey’s show, calling it a “train wreck”.

“So, let me get this straight. You live in your mom’s basement, but you have a coach bag,” says Ramsey. “Here’s what happens—you can’t avoid life, it’s coming for your ass. Mama can’t protect you. “

Whether you’re an adult living with your parents or have kids who haven’t left the nest, these simple rules can help if the family home is starting to feel a little crowded.

Why do young people still live at home?

Nearly half of all young people ages 18 to 29 live with their parents — the highest level since 1940 — according to US Census Bureau data.

Multigenerational living has been steadily increasing over the past five decades, though the economic repercussions of the COVID-19 pandemic have highlighted this trend, with many people. The adults “boomerang” back home.

While the hosts of The Ramsay Show claim that these adult children are being “empowered” and “pampered,” many simply cannot afford to live on their own in the current economic climate.

Rising rents and High mortgage rates It made getting out of the house more difficult. High inflation affects everything from gas to groceries raise interest rates Increase borrowing costs.

The Morgan Stanley report also says they may also be motivated by other social factors, such as enrollment in higher education and marriage later in life.

What should you do with the extra money

There are many practical benefits to living with your parents, but it’s also important that you use this time to work toward your goals, such as becoming financially independent.

“The problem is you have debt, you don’t make enough money and you don’t do enough to go out and change it. Mom and Dad can’t do it for you,” said Ramsay Show co-host Jade Warshaw.

Here are three ways to focus on your financial health instead of splurging on the fancy stuff.

1. Don’t buy now, pay later

the The rise of buy now, pay later (BNPL) options at checkout have made it easier for younger consumers to buy expensive luxury items, Quartz notes. But if not used responsibly, the financing feature can push shoppers into more debt.

If you don’t have enough money in the bank to currently fund your Prada portfolio, don’t count on BNPL to help you cover the costs in instalments. There are a lot of risks to look out for.

While some BNPL plans come with no interest or late fees – making them a popular alternative for taking advantage of them credit card debt Fees may start to increase if you miss a payment.

Consider working on a plan to settle (rather than add to) your existing debt, such as paying your bills in full and on time or Consolidate multiple loans into one If it is difficult to keep track of them.

Read more: Here’s How Much Money The Middle-Class American Family Makes — How Does It Stack Up?

2. Stop your Shein trips

While it can be tempting Indulge in cheap clothesespecially expensive brand imitators, try not to get carried away.

Fast-fashion retailers like Shein and Boohoo may offer gorgeous $6 dresses that seem like a steal — but adding more unnecessary pieces to your wardrobe is bad for the environment and your wallet.

You may have more room for discretionary spending, but your money is better spent somewhere else, like investing it in the stock market, even if it’s just a few dollars each time.

3. Start saving now (so you can finally get out)

While you’re saving on rent by living with your parents, make sure you set aside some spare cash to eventually leave the nest.

If you plan to buy rather than rent when you move out, experts generally recommend saving 20% ​​of the home purchase price for a down payment, but this can be a challenge for many. first timerEspecially with the continued rise in home prices.

You’ll also need the money to support your monthly mortgage payments, utilities, and other basic daily expenses. And don’t forget to set aside a few for emergencies, so when your car breaks down or your pet gets sick, you don’t have to call Mom and Dad for help.

Dave Ramsey isn’t the only expert trying to flesh out the idea of ​​getting your financial business together.

Personal finance icon Suze Orman recently imparted some sage savings wisdom through a Recent chat with Moneywise.

“Listen, $10 is better than nothing. $50 is better than $10, and $100 is better than $50. Because sometimes, $200 and $400 can make a huge difference to your situation.”

watch now: Suze Orman tells a cautionary tale about what happens when you can’t cover the next financial emergency

Do your research, determine how much home you can afford in your chosen location and create a savings plan that you can stick to.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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