Renting a home is not cheap. In fact, Zillow puts the average monthly cost of rent at $1,850 nationally.
Let’s say you’re in your mid-20s and looking to rent a townhome for more space and a sense of independence. The catch? You have to fork over $5,000 in advance for two months’ security and additional fees. That’s a hefty chunk of change.
It’s not uncommon for young adults to live at home with their parents until they have sufficient funds stashed away for rent and utilities. Sometimes, parents will charge their kids “rent” only to set it aside to give back to them once they’re ready to move out.
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But what if your parents went back on that promise and instead deposited your “rent” into one of their 401(k)s? Now, you’re short on the $5,000 you owe for the townhome.
It’s a difficult situation, but it doesn’t mean all is lost.
When family lets you down
It’s not uncommon for young adults to move back into their parents’ house. A recent Thrivent survey found that 46% of parents with children aged 18 to 35 had a child move back home.
It’s also not a bad thing to contribute financially when you’re living with your parents as a young adult. That could mean paying rent, chipping in for utilities or covering food costs. However, problems can arise if someone fails to follow through on a financial arrangement, such as your parents promising to return your rent and not doing so.
You may have a few options if you find yourself in that situation. First, you should know that if your dad is at least 59½ years old, he can access his 401(k) plan without an early withdrawal penalty. Just because the money you paid has landed in that account doesn’t mean it’s off limits.
Next, you can try negotiating with your parents. If you’re short, say, $1,200 on move-in fees, you can ask if they’d at least be willing to return that sum immediately — even if you were promised you’d get more rent back than that. This could allow you to cover your costs and leave their home, which you may especially want to do if you’re feeling hurt about them not keeping their promise.
Another option is to delay moving until you’ve saved more. This might be a good idea in general. A recent Ipsos poll found that 73% of Americans have a negative view of the U.S. economy, and 72% think new economic policies could spur a recession.
It’s a dangerous time not to have savings, because if you lose your job, you might struggle to cover your rent. And if your living costs increase broadly because of tariffs, you might have a hard time paying your bills or risk ending up in debt.
So, if $1,200 is the difference between being able to move out or not, you may want to hold off until you’ve saved that sum plus enough money to cover at least three months of essential bills.
Another option may be to negotiate a lower move-in fee. For example, if you can’t swing a full security deposit, but have great credit, a landlord may be willing to let you put less money up front.
You could also consider moving to a smaller rental for a year and then upsizing once you’ve saved more. A townhome might seem like a comfortable place to live, but you might spend a lot less on rent by moving into a studio or one-bedroom apartment.
That said, if the townhome is large enough, it may be feasible to get a roommate. If that person can split the move-in costs with you, you may be able to get into that home right away. And as a bonus, you’ll have someone to split rent and utilities with on an ongoing basis.
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The cost of financial independence
There are many reasons why so many young adults struggle to leave the nest and end up moving back home. Thrivent found that 32% of young adults moved back home because of a lack of housing affordability, while 30% cited increasing prices on essentials.
The ever-rising initial cost of renting a home can also catch young adults — and renters of all ages — off guard. Take the security deposit, for example. In a 2023 report, Zillow found that 87% of renters paid a security deposit, with the average cost ranging from $500 to $999.
Some landlords charge a security deposit equal to a full month of rent, which can be cost-prohibitive for people with limited funds.
There’s also the issue of rent itself being unaffordable. Recent data from the Harvard Joint Center for Housing Studies found that 22.4 million renters spend more than 30% of their income on rent. A 2023 Bloomberg survey also found that nearly half of Americans ages 18 to 29 were living at home due to being unable to afford rent, the same amount as in the 1940s.
Part of the problem is that landlords are less likely to negotiate rent when you’re first moving in. Tenants tend to have more negotiating power when their leases are up, because there’s a cost to finding a replacement tenant, and because landlords are more inclined to bend for tenants with a strong history of paying rent on time.
When you’re a new tenant, a landlord is taking a chance, so you may not have the same wiggle room to negotiate. But, that doesn’t mean you can’t or shouldn’t try if it spells the difference between being able to afford a rental or not.
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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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