Moving out of your parents’ house, no matter what the circumstances are, is a step toward independence. However, once you’re out in the real world, you have a lot of responsibilities to consider that you may not have thought of while living under their roof.
Here are five financial goals to focus on as you make the transition.
1. Set a Budget
Until now, Mom and Dad probably covered the expenses for the house you were living in, but now it’s your turn. When creating your budget, think about how much you can afford to pay for rent and cover the other things that come along with a home, which you may not have thought of. You’ll likely be renting, so you will need to factor in expenses like a security deposit, utilities and possibly renters’ insurance.
2. Consider All Your Expenses
Your budget won’t just include rent. Think about the other things you’ll need to pay for on a weekly or monthly basis, like health insurance, groceries, transportation (including car insurance), clothes and entertainment. If you’re on a tight budget, consider reducing your spending on fast food or entertainment, including in-home perks such as cable.
3. Put Money Aside
If your parents gave you any notice about moving out, saving up a bit of money before the actual date is a good idea. But even if you haven’t done that, you can hit the ground running on the job search and start putting money aside until you have a steady paycheck. Consider setting up one bank account for regular expenses and a separate account for unexpected financial strains, like a medical emergency or car repairs.
4. Pay Any Debts
If you have student loans, car loans, credit card debt or any other debt, think about how you can budget to get these paid off. Doing so can help you lower what you ultimately pay in interest over time and improve your credit score. Be careful about charging more to credit cards than you can afford to pay back — you don’t want to rack up additional debt, which can lower your score.
5. Build Your Credit
You may be renting a place for the next few years, but one day you may want to buy a home of your own. The habits you have now may play a role, as your credit score is a part of getting a mortgage. The five factors that make up your credit score are your payment history, debt usage, age of credit, different types of accounts, and new credit inquiries. To see how the choices you’re making impact your credit, you can view your free credit report card, updated monthly, on Credit.com.
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