More young adults are living with their parents than ever before. That’s because millennials are different from previous generations – they are marrying later and have a lot of student debt that prevents them from leaving their parents’ homes. The cost of housing, whether you are renting or buying, has gone up considerably in recent years.
It’s possible for young adults to strike out on their own early but it needs planning. You need to have your finances in order before you rent or buy your own place. You need an idea of your expected monthly expenses. You need an emergency fund in case you lose your job or have some expected expenses.
Let’s take a look at how you can prepare to move out.
Preparing to move out
Open a saving account
You will need to save some money before you move out. The easiest way to do that is to open a saving account. Many savings accounts pay good interest rates – this allows your money to grow while you are saving. When you open an account, ensure the savings account has no fees or minimum deposits.
Build an emergency fund
This is a fund you can tap into if you have unexpected bills. A good rule of thumb is to have three to six months of living expenses. Your savings account that you use to save money for moving out can also serve as an emergency fund if you ensure that you have money for both.
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Create a budget
Know the full cost of living on your own. Based on your lifestyle, you will need to prepare a monthly budget. Your budget should be less than your income. Account for things like rent, utilities, food, gas, internet, and other expenses. Apps like Mint can help you prepare a monthly budget quickly.
Build up credit
When you are trying to rent a home, your landlord will check your credit to ensure that you are a reliable tenant that pays the rent on time. Similarly, if you are planning to buy a home, the lender will check your credit history. If you have debt, pay them off but don’t close the account. Older accounts actually improve your credit score.
Get your credit report from credit rating agencies such as Experian, TransUnion, and Equifax, and check for any errors. You could improve your credit score by becoming an authorized user on someone else’s credit card. As long as they have a good credit history, their credit score should improve.
Prepare while you are still with your parents
While you are still staying with your parents, pay rent to your parents and share some household expenses. Get used to paying bills on time and slowly build responsibility. This will come in handy when you move and you are on your own.
Supplement your income temporarily if needed
To save up money faster, consider getting a second job. There are plenty of jobs you can do in the evenings or on weekends. Consider becoming a DoorDasher or pick up other side hustles to increase your income.
Get a roommate
Your rent is likely to be one of your biggest expenses when you move out. Getting a roommate is a quick way to save money on rent. You can move out on your own later if you can handle the rent yourself.
Buy second-hand furniture
When you first move out, you don’t need high-end furniture. You can pick up used furniture on Facebook. This will save you a lot of money.
With proper planning, you can move out faster and save yourself a lot of hassle. You need to save money and build up credit. Consider getting a second job to accelerate your savings. Having a budget in mind will help you plan for future expenses. Practice paying bills while you are still living with your parents. When you move out, you could save money by sharing your house with roommates and buying used furniture.