Oct 10, 2025
According to 2024 data from the U.S. Census Bureau, approximately one third of young adults in the U.S. are living at home with their parents.
Imagine Mike, a young man who recently landed a dream job in Silicon Valley and is now ready to move out on his own.
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More than half of his generation report that they don’t make enough money to live how they would like [1].
At 28, he finally has the option to live alone, which has always been his aspiration. He is single, with no children, no debts, but also very little in savings.
His new job will give him a take-home pay of about $100,000 per year, and he has been eyeing apartments in the area — most of which are slightly above his budget. The average monthly rent for a one-bedroom apartment in San Francisco and San Jose are $3,092 and $2,671, respectively, according to Apartments.com [2].
After doing some hunting in the competitive housing market, he can opt for an apartment close to his office for $3,500 per month, or move into a two-bedroom place for $1,875 per month and therefore save about $20,000 per year.
While Mike wants to be financially responsible, he also thinks he would really prefer the peace and quiet of living alone, not to mention the feeling of independence, especially after many years of living under his parents’ roof with his younger siblings.
Here are the factors to consider to ensure he can make a wise decision.
Budgeting guidelines
Doing the math, Mike’s one-bedroom apartment would eat up a little more than 40% of his take-home pay each month, which is more than the recommended figure of 35%, though it is on par with average housing spending. Data from the Census Bureau’s 2023 American Community Survey shows that 50% of renters spend 30% or more of their income on housing (compared to 21% of homeowners who spend over the 30% mark).
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So, opting for a rental that’s shared will keep more money in his pocket, but roommates come with downsides. Some of these might include a lack of privacy, which Mike experienced at home with his parents and siblings, different ideas about housekeeping and cleanliness, and different lifestyles and interests that make it difficult to make friends with your new housemate.
Whether Mike can afford to spend extra on rent or not comes down to how he will budget in other categories and if he can make cuts in them.
The recommendations from the Credit Counselling Society is to spend between 10-20% of your monthly net income on food, 15-20% on transportation, and save 5-10% [3].
Assuming he’s spending at the highest bracket in each of those categories, including his $3,500 in rent, this gives him only about $700 left over for other bills and utilities, discretionary spending, paying down debt and any other needs that may arise. This may not be enough to allow him to live the lifestyle he wants.
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There may be ways for Mike to free up room in his budget, including eating most of his meals at home, opting for public transportation over owning his own car, and finding inexpensive ways to connect with friends and colleagues socially. However, he may be tempted to blow his budget in favor of the high-spender lifestyle that comes with life in Silicon Valley.
Mike has to also consider the missed opportunity of investing that extra $20,000 per year he would save if he has a roommate. Even if he only saves for a single year — and assuming a 10% average annual return — that $20,000 could grow to close to $1 million in 40 years, when Mike is 68.
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What should he do?
So is Mike’s plan to live alone a good one? If he can find room in his budget to put a healthy amount toward savings each month, and can find reasonable ways to trim down expenses like food, transportation and entertainment, it may be worth the extra expense, especially if he thinks living alone will suit him.
If he manages to invest $800 per month, and continues to do so for 40 years, he will eventually see $4.2 million in his retirement account assuming a 10% average annual return — well above what he should need for a comfortable lifestyle at 68.
However, there is one last point to consider: American men aged 15 to 34 are more likely to be lonely than their peers in other OECD countries, according to a Gallup poll released this year [4]. In the U.S., a higher percentage of young men in the U.S. report feelings of loneliness than any other group, including senior men and women.
So while Mike may indeed find living alone enjoyable, he should also consider that he’ll have to find opportunities for social connection in his busy calendar, and also plan for this in his new budget.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Bank of America (1; Apartments.com (2); Credit Counselling Society (3); Gallup (4)
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Rebecca Holland is dedicated to creating clear, accessible advice for readers navigating the complexities of money management, investing and financial planning. Her work has been featured in respected publications including the Financial Post, The Globe & Mail, and the Edmonton Journal.
