Higher Purpose Finance is a new personal finance blog run by two accountants, husband and wife. The following is a post written from the perspective of Garmeon. This post describes his experience living at home with his parents and his gradual transition towards financial independence.
- 1 Western Versus Eastern Culture
- 2 There Is No Financial Number For Happiness
- 3 Growing Up In a Middle-Class Asian-American Family
- 4 Garmeon’s Adult Life as a Boomerang
- 5 Disadvantages of Life as a Boomerang
- 6 Impact of Living at Home On Social and Dating Life
- 7 Staggering the Endowment of Your Inheritance
- 8 Concluding Thoughts
Western Versus Eastern Culture
Why do Americans still shame adults who live with their parents? Why do we still use the English system of measurement while the rest of the world use the metric system?
No one knows.
It makes no sense, but that’s what we do.
Around the world, a majority of adults between the ages of 18-35 live with their parents. More than 65% of Italians aged 18 to 34 live at home with their parents, and nearly 75% of them are men. In Asia, Hong Kong has 76% of its adults aged 18 to 35 still living with their parents. This practice is partly cultural, but also partly practical (saving money on high rents, etc.).
Speaking from my own ethnic background, Asian families value family and the collective. We support each other without question. You can learn about this in an Asian-American studies class yet, still, be unable to understand why we do this in the real world – beyond theory. Sam, from Financial Samurai, acknowledges in a recent post that the law of averages dictates some people will inevitably be born less intelligent or skilled. These are family members that need more support, not tough love.
Whereas Westerners value their American rights to liberty and the pursuit of happiness. Individualism and independence are highly valued, sometimes to everyone’s detriment.
Baby Boomers are blaming the laziness of Millennials for boomerang children, not a changed job and housing market. The days of job stability (one job for your entire career) and pensions are gone. Living at home in the U.S. is on the rise (55% of adults aged 18-24 and 16% aged 25-34, less than other countries and still complaining about it!).
This engenders a culture of hard expectations that children must move out after becoming of legal age. This value results in the rampant homelessness problem we have. You can see, particularly in major coastal cities in the U.S., a majority of homeless are non-Asian. This is because they lack the typical Asian support system.
In turn, for those adult children that made it, they are quick to send their elderly parents to senior homes – rarely visiting. It is a fact that elderly neglect is another problem we have in this country.
In comparison, inter-generational households for Asian families are the norm. Old, middle-aged, and young alike cohabitate together.
According to Melanie Hamlett from The Guardian, until she started dating foreign men and living outside of America, she didn’t realize how much she judged people who didn’t leave home by the age of eighteen.
Now, with her changed perspective, she wonders how self-reliant are you when you need to live off of credit cards and cash advances. With a bit of sarcasm, she adds: “at least people will date you.”
According to a new Deloitte study, the average net worth for people ages 18-35 is less than $8,000. This is far below Financial Samurai’s prescribed net worth for the above-average individual shooting for financial independence.
There Is No Financial Number For Happiness
As a wealthy individual, it is still possible to raise your child not to be complacent and stay driven to create his own success.
This is done by fostering a close relationship with your child and creating an artificial environment of scarcity.
Studies show $75,000 is the annual income needed for maximum happiness.
My family and I live and grew up in San Francisco, one of the most expensive places in the world. I have relatives here with an income lower than $75k, but manage to live contently together. Human beings can be extremely resilient when resources are scarce.
We need to free ourselves from our dependence on money and the need to buy things.
Therefore, there is NO magic number for happiness.
It’s all about managing expectations because, as the wealthiest nation in the world, children have come to expect immediate gratification in the form of electronic devices.
For adults, their toys come in the form of cars and houses. In the last several decades, family sizes have continued to drop to an average of two to three people. In contrast, average home sizes have increased to about 2,500 square feet.
We should consider ourselves lucky if our basic needs met and are together with our family.
Growing Up In a Middle-Class Asian-American Family
You might be asking “do we need to replicate a situation of living in abject poverty in order to build an appreciation for what we have?”
The answer is no.
Until a child is 18 parents have control of a child’s environment. By creating “artificial scarcity,” you can imbue children with a mindset that does not remain complacent because there’s an over-abundance of resources available.
A parent needs the strength to tell their kid no even when they can give everything that is asked for. This is crucial in the development of a child because a kid will inevitably learn one day that there are opportunity costs in this world.
I grew up with no allowance, unlike most American kids. Chores were done because these were tasks around the house that needed to get done. We didn’t get the coveted video game consoles for Christmas. Electronics were closely regulated.
A person’s spending habits and mindset towards money stays the same, even if they went from having no money to having a lot of money. We at higherpurposefinance.com believe a person’s money mindset is a mixture of nature and nurture. A person has their tendencies when it comes to accumulating and spending their resources, but the apple doesn’t fall far from the tree (the tree being a person’s family) – even if they were a rebellious child.
In my case, he and his brother grew up in a middle-class family in the outer parts of San Francisco with their father as the main source of income. Dad was a counselor at the local junior college and their mom ran a small deli in the area.
Mom’s business was located near enough to the kids’ school which allowed her to balance childcare and work. Also, since Dad worked in academics, he was able to pick up the kids from school and bring them to afterschool activities, such as swim team practice. He also got summers off.
Money only matters when you don’t have enough of it for survival, but once it becomes a paper chase (hoarding money) time becomes the more valuable asset.
Garmeon’s Adult Life as a Boomerang
Fear of failure is common, but in my case, it was a fear of success. Having the option to fail with a safety net led to analysis paralysis, inaction, and sometimes even avoidance. Many people in our experience, find changes to careers as unacceptable failures.
In contrast, my father always encouraged exploration and expected many changes/obstacles along the way until you find what you’re searching for. In life, we’re always continually searching and failure is inevitable like a stock market dip/crash. If you don’t have the mental fortitude to withstand failure or accept that it’ll eventually happen, you’re in for a rude awakening.
I boomeranged multiple times in adulthood. Here is my timeline:
- Went to UC Davis for college. My parents moved into a second home they bought nearby in Sacramento, visiting often. This was NOT done at my request. I chose a safe, well-paying major with a hot job market: biotechnology.
- After spending five years in undergrad, I moved back home with parents in Sacramento and spent a year and a half re-branding and discovering a new major: accounting. I received mentorship from a professor, something I never had in undergrad. Eventually, I got accepted into USC’s Masters in Accounting program.
- The USC program was one year long and even in the one year spent down in sunny Southern California, I requested that my mother come along. My brother attended a different program at USC that year and suggested I give a try at truly living on his own but I didn’t listen. I was always a book-smart person, though, spending my summer completing my CPA exams instead of going on a graduation trip to somewhere.
- After graduating, I moved back to San Francisco and started my career at the age of twenty-six with a Big 4 accounting firm. Despite needing to drive a fifty-minute drive one-way, I chose to save money by living at home. Over the course of four years, I tried to find his fit within three different accounting firms, met my future wife, and exited corporate accounting at the age of thirty. Unlike at the beginning of my career, working for a large firm had lost its glamor and I had become disenchanted with the whole idea climbing the corporate ladder. I found that people value the status gained from their respectable 9-5 job, even more than the money. People need to assign meaning and purpose to the work that they’re doing, even though on most days ticking and tying numbers from one spreadsheet to another eventually becomes meaningless for many.
Disadvantages of Life as a Boomerang
- Lack of privacy
- Always the loser in an argument
- Guilt, as an adult, you should be taking care of your parents
- Resentment from peers for taking the “easy way out”
Impact of Living at Home On Social and Dating Life
Living at home, during school and throughout my career, never became an issue for my social and dating life. My parents, particularly my dad, were good at assimilating with my social circles. I’ve even been on a date with my dad along!
Sure there may have been some women that negatively judged my living situation, but I’ve had girlfriends stay the night over at my parents’ house and my eventual wife essentially lived with me and my parents for nearly a year.
Staggering the Endowment of Your Inheritance
My father always emphasized to us children not to expect an inheritance. He kept repeating to us that our education is our inheritance and he kept his word by paying off our student loans ($125k between undergrad and grad school, $225k for brother between grad school and some towards med school).
We believe that staggering your estate transfer over your lifetime is the way to go. Here is the timeline on that, so far:
- More than half the value of the car when I started my career, $10-12k.
- Student loans, as mentioned above.
- We, as a family, pooled our assets to pay for the down payment of our home. ($75k mother-in-law, $50k dad, $35k us) We address our feelings of receiving money from parents at our ages (I’m 32, Kathy’s 27) in our concluding thoughts below. To those who don’t have the luxury of financial support from parents, it becomes about keeping the right mindset. Don’t focus on the Joneses. Focus on what you CAN change. Work on achieving your own goals.
- Parents gave $10k for our upcoming wedding.
When it comes to figuring out how to raise your (adult) child, there’s varying judgment on the parents part. To us, there is no one correct way to do things. The key is to give on an “as-needed” basis determined by the parents and being there to emotionally support and guide your child, beyond just giving money.
We don’t have specific plans yet regarding supporting our children financially after 18. We’re going to use our best judgment when the circumstances arise. When it comes time to fully pass on our estate after we pass away, we want to set conditions that must be met before our children receive their inheritance by creating a trust. For example, they need to earn their first million before receiving anything or houses that are passed on can not be sold.
During my short career in the corporate world, I spent much of my time pondering, contemplating, and planning how to live the best life possible (see bullet points below).
My parents actually encouraged me to foster the natural artistic talents that I had as a child, but in a twist of fate, it was actually me that created the expectation that I needed to live a rich lifestyle and get a job that makes a lot of money.
I had to twist and turn to navigate my way through life, ultimately finding out corporate life wasn’t the right fit. Finally, it’s led to me starting a solo business venture. We’re excited to see where this blogging thing takes us.
In the comment section of one of Financial Samurai’s posts, Mr. FS made us contemplate whether Garmeon can be truly considered early retired since his investment/blogging income isn’t enough to self-support yet and he’s dependent on his wife’s income.
He also asked whether we felt any guilt accepting the large gift that went towards a home down payment from our parents.
To that, we say by his definition “no, not retired” but Garmeon feels immeasurably blessed and fortunate by his situation. Being able to escape from the stresses of working a corporate job to working on your passions is the best possible outcome. In another one of Mr. Financial Samurai’s posts, it states the top three contributors to happiness are time with family, time to self, and owning a house. To that end, we can say I’ve accomplished all three:
- Spending time and traveling with aging parents who’ve sacrificed so much
- Spending time thinking of how to live the most fulfilling life which most people either never do, struggle to do, or start doing once they stop working at 65
- Spending time with wife thinking of adventures to go on together
- Spending time thinking of how to start a family together
Secondly, we are both in agreement when we say that we took a gift from our parents with no expectations from the start. It is our parents’ personal goals to help us buy a home. However, it is a give-and-take. We plan to let the wife’s mother live with us when we have children. We can only hope that we can be there for our parents in their old age as much as they’ve been there for us.
With this, we hope the insight we’re giving reaches people and helps change people’s perspective on adult children living at home with their parents.