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More young people are choosing to live at home with their parents, but many of them are using what they save on rent instead to buy designer handbags and expensive jewelry.

Analysts at Morgan Stanley say these young people have more room in their budgets for discretionary spending and are helping to fuel a boom in the luxury goods industry.

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Personal finance author and radio host Dave Ramsey slammed the trend on The Ramsey Show, calling it a “train wreck.”

“So, let me get this straight. You’re living in your mom’s basement, but you’ve got a Coach purse,” says Ramsey. “This is what will happen. you can’t avoid life, it’s coming for your ass. Mom 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 young adults ages 18 to 29 live with their parents, the highest level since 1940, according to the U.S. Census Bureau.

Multigenerational living has been steadily increasing over the past five decades, though the economic fallout from the COVID-19 pandemic has put the trend in the spotlight as many adults boomerang into the home.

While the hosts of The Ramsey Show claim that these grown children are being “chanced” and “coddled”, many simply cannot afford to live on their own in the current economic climate.

Rising rents and high mortgage rates have made it much more difficult to get out. And high inflation affects everything from gas to groceries, while rising interest rates raise borrowing costs.

The Morgan Stanley report also says they may also be driven by other sociological factors, such as getting a higher education and marrying later.

What should you do with extra cash?

Living with your parents has many practical benefits, but it’s important that you also use this time to achieve your goals, such as becoming financially independent.

“The problem is you’re in debt, you’re not making enough money and you’re not doing enough to go out and change it. Mom and Dad can’t do that for you,” says Jade Warshaw, co-host of The Ramsey Show.

Here are three ways to focus on your financial health instead of splurging on luxury items.

1. Don’t buy now and pay later

The rise of buy-now-pay-later (BNPL) options at checkout has made it easier for young consumers to purchase expensive luxury goods, Quartz notes. But if not used responsibly, the financing feature can drive buyers deeper into debt.

If you don’t have enough money in the bank to finance a Prada wallet, then don’t trust BNPL to help you pay the expenses on credit. There are many risks to be aware of.

While some BNPL plans have zero interest or late fees, making them a popular alternative to credit card debt, the fees can start to add up if you miss a payment.

Consider working on a plan to clear your existing debt (instead of adding to it), such as paying your bills in full and on time, or consolidating multiple loans into one if they’re difficult to keep track of.

Read more: Here’s how much money the average American family makes. how do you collect

2. Stop Shane’s shipping

While it can be tempting to indulge in cheap clothes, especially knockoffs of expensive brands, try not to get carried away.

Fast fashion retailers like Shein and Boohoo may offer $6 dresses that seem like a steal, but adding extra pieces to your wardrobe is bad for both the environment and your wallet.

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

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

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

If you’re planning to buy instead of rent when you move, experts typically recommend saving 20% ​​of the home purchase price for a down payment, but that can be difficult for many first-timers, especially as home prices continue to rise.

You also need to have money for your monthly mortgage payments, utilities, and other important day-to-day expenses. And don’t forget to put some aside for emergencies so that 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 weigh in on getting your financial act together.

Personal finance icon Suze Orman recently shared some wise saving tips in a chat with Moneywise.

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

WATCH NOW. Suze Orman tells a cautionary tale about what happens when you can’t cover your next financial emergency.

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

What to read next?

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


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