Published On: Thu, Oct 8th, 2015

Millennials: How You Can Afford to Live Well on Your Own

With the job market slowly recovering and the student loan debt crisis this country is currently facing, it’s no wonder why at least 3 in 10 millennials had to move back in with their parents and even more young adults between the ages of 18 and 34 don’t even consider moving out any time soon due to not being able to afford to live on their own.

If you are a millennial currently struggling to makes ends meet and land a job, you should definitely consider staying with family so you can get back on your feet and improve your financial situation. Eventually, you’ll either want and/or need to move out on your own.

If you already have an entry level job and need or want to live on your own, there are plenty of ways to live well in your own place and be able to cover your basic needs without having to ask your parents for money.

If you’re longing to experience living on your own and being more financially responsible, or if you’re looking for a way to start thriving in your own place instead of just barely getting by, here are some tips and techniques to help you be able to comfortably afford living on your own.

Save Up What You Can Before Moving Out

Saving up before taking the big leap and moving out on your own is crucial. It’s best to have some sort of money set aside in case of an emergency along with money to cover moving expenses and a security deposit for your new place. In an ideal situation, you should save up for several months before moving out.

I saved up quite a bit before moving out of my parent’s house at 20 years old and used any extra money I had as a financial safety net in case the worst happened. When you live on your own, you want to make sure your life and finances are as secure as they can be.

Get a Roommate

Getting a roommate is one of the most effective ways to cut housing costs as long as you’re willing to share space. Being able to divide rent, food expenses and utility bills in half will really help relieve the burden of having to pay for everything on your own.

If you have someone who you get along well with and is financially responsible and pays their bills on time, consider going half on a place together to share the costs while still being able to live independently.

Aim for a Moderate Living Space

Many adults become ‘house poor’ because they end up spending more on housing than they can afford. Ideally, your rent or mortgage shouldn’t exceed 30% of your income. This is very important, because you will have many other expenses aside from housing to worry about and one expense should never dominate your budget.

Calculate how much you can realistically afford by multiplying your monthly income after taxes by 0.30. Try to aim for something even lower than this amount just to be safe.

If you want to live in a major city, try to steer clear of prime areas downtown where housing prices are overpriced and search for more moderate and affordable options in the outskirts of the downtown area or even a neighboring suburb.

When I first moved out to live closer to my university in college, I rented a somewhat spacious but super affordable 3rd floor apartment. It didn’t have a dishwasher, washer and dryer, central air or any other fancy additions, but it was clean, cozy and affordable. To this day, I still don’t aim for fancy apartments with tons of expensive amenities because I’d rather be able to pay my rent each month with ease instead of having to struggle.

Start Budgeting for the Basics

Maintaining your budget will become key in order to successfully live well on your own. Try to list out all of your mandatory expenses and basic necessities and see if you can reduce them in any way.

Rent should be pretty standard but you can monitor your energy usage to lower utility bills and meal plan and shop for food sales in order to save money on groceries. Also, negotiate your insurance rates to lower them and don’t forget to sign up for homeowners or renters insurance.

Allow yourself a set amount to spend each month for toiletries and household items and track your spending.

Limit Expenses on ‘Wants’ and Luxuries

Living on your own allows you a certain sense of freedom, but it also comes with quite a few sacrifices. You most likely won’t be able to dine out as much and attend pricey events regularly. You may have to cut down on your cell phone bill or utilize public transportation more instead of driving. Shopping sprees may start to become unheard of and you’ll have to pay better attention to where your extra money is going each month.

If you want to comfortably live on your own, you’ll have to prioritize needs over wants big time and cut back on any unnecessary luxuries. This doesn’t mean you have to give up your life and stay home each weekend. You’ll just need to become creative and adopt a frugal mindset. Frugal people value experiences much more than material possessions and find affordable or free ways to have fun and find fulfillment.

Instead of attending an expensive concert, you may opt to go to a free festival instead. Groupons and LivingSocial deals will most likely become your best friend. When an old friend comes into town, instead of going out to lunch or dinner with him or her you might offer to cook a meal for the both of you or invite them over for drinks and a movie. Limiting your dining out and entertainment expenses will make a huge difference to your financial situation and allow your budget to loosen up a bit so you can fully enjoy the benefits of living on your own.

When did you feel financially confident enough to move out of your parents’ house? If you are a millennial, what financial strategies are you using to manage your budget and live comfortably on your own?

The post Millennials: How You Can Afford to Live Well on Your Own appeared first on MoneyChat.

Source: The Money Chat

#MoneyChat Staff Author

Dorethia Kelly, is the founder of #MoneyChat and president of Conner Coaching, LLC providing results-oriented personal finance and business coaching services. Known for her no nonsense approach and charismatic personality, Dorethia is passionate about helping individuals successfully manage their money and business owners increase their bottom line. She speaks to youth and adults in areas of money management and business with #MoneyChatLIVE workshops and live events. In 2015 she published #MoneyChat THE BOOK – available on Amazon.com.

About the Author

- Dorethia Kelly, is the founder of #MoneyChat and president of Conner Coaching, LLC providing results-oriented personal finance and business coaching services. Known for her no nonsense approach and charismatic personality, Dorethia is passionate about helping individuals successfully manage their money and business owners increase their bottom line. She speaks to youth and adults in areas of money management and business with #MoneyChatLIVE workshops and live events. In 2015 she published #MoneyChat THE BOOK – available on Amazon.com.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study