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Millennials and Gen Z living at home are a ‘train wreck’ thanks to their parents, says personal finance guru Dave Ramsey

January 23, 2023, 4:33 PM UTC
Dave Ramsey doing his radio show
Young adults living with mom and dad aren’t managing their money wisely, says Dave Ramsey.
Anna Webber—Getty Images

Personal finance guru Dave Ramsey has a lot to say about the nearly half of young adults who are still living at home—a level that hasn’t been this high since the Great Depression. 

This cohort (those ages 18 to 29) is driving the growth for luxury goods in the U.S., say Morgan Stanley analysts in a December report. The analysis found that living at home freed up older Gen Z’s and younger millennials’ discretionary spending, enabling them to snap up designer handbags and watches. Ramsey, a self-made millionaire and author of numerous personal finance books, blasted the trend on a recent episode of The Ramsey Show. 

“So, let me get this straight. You live in your momma’s basement, but you got a Coach purse,” Ramsey said. “Here’s what’s going to happen—you cannot avoid life, it’s coming for your butt. Momma can’t protect you.”

Saying the trend will result in a “train wreck,” Ramsey blames not the young adults but their parents for “out of control” helicopter parenting and “coddling.” 

“The problem is you’ve got debt; you’re not earning enough money; and you’re not doing enough to go out and change it,” cohost Jade Warshaw added. “Mom and dad can’t do this for you.” 

But the situation is a little more complicated than that. The economy, rather than parenting or lack of willpower, is forcing many young adults to live at home. (The Ramsey team didn’t respond to request for comment.)

Living at home can help young adults save money

Millennials, a highly educated cohort who graduated into the Great Recession and its aftermath, entered a difficult job market while saddled with enormous student loan debt. Many have since been able to make strides in building wealth, but the long act of getting there has prompted them to marry, start a family, and buy a home at a later time than their parents did—if they even partook in these life milestones at all. 

“It’s almost like we don’t want millennials to get a piece of the American dream,” André Perry, a senior fellow at the Brookings Institution, told Fortune in November

Gen Z has also faced its share of financial challenges, the oldest of whom were thrown into a pandemic and dismal labor market at the foot of their careers. While they gained the upper hand at work as the job market bounced back and recession threats motivated them to save more than other generations, many doubt they’ll be able to save enough for retirement and to buy a home.  

Both generations are now facing 40-year-high inflation for the first time, with some unable to afford a roof over their head. U.S. rent prices increased so much last year that Americans now have to work six hours more per month to afford it than they did before the pandemic. 

Sky-high rent is why 39% of the millennials who moved back in with their parents last year did so, per a survey by PropertyManagement.com. More than half said they boomeranged back home to save more money.

It’s proof that living at home with parents can be financially beneficial. “This should not necessarily be viewed as a negative thing as long as there are clear fiscal goals in place,” Doyle Williams, an executive vice president at Country Financial, said back in 2018, adding that this can help millennials build an emergency fund and save for a down payment.

At the time, the Country Financial Security Index found that 35% of millennials were still living at home with their parents. That stands at one in four today, per the PropertyManagement.com survey. A separate study found that nearly 30% of adult Gen Zers are still living at home with their parents, held back from moving out on their own by the rising cost of living.

Sure, some young adults prefer to treat themselves—after all, Gen Z is motivated by affording material goods more than any other generation and began spending on these high-ticket items earlier on. But if that’s the case for those living at home, that doesn’t mean they’re also not socking money away. It also doesn’t mean that every boomerang kid is splurging on luxury.

Many just hope that living with their parents will help them one day afford what was once more easily attainable for mom and dad.

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