Living on your own can be exciting, especially if you’re doing it for the first time. Perhaps you just moved out of your parents’ house or maybe you’re getting out of a long-term relationship, and this is your first time living alone in several years.
Whatever the case might be, living alone gives you the freedom to do what you want, but it also comes with a lot of responsibility. That includes responsibility for the finances since you will be the sole person making monetary decisions.
Here are three of our best tips to manage your finances while living by yourself.
1. If You’re Currently in Debt, Focus On Getting Out of It
Ideally, you won’t be in any debt when you set off to live on your own. However, this isn’t the case for many individuals.
If you fall into this camp, figuring out the fastest way to get out of debt should be one of the first things you do. How you will do that depends on the nature of what you owe. Maybe you have credit card debt, or perhaps you’re dealing with student loans. Regardless of the type of debt, you should try to put as much toward paying it off as you can.
You might pay off the smallest debts first, then work your way up to the largest ones. Another method is to prioritize the ones with the highest interest rates. No matter which strategy you choose, getting rid of that debt should help you sleep easier at night, and it will also boost your credit score.
2. Compile a Budget Spreadsheet
Let’s assume that you have a steady job. If you’re lucky, maybe you have a relative who’s helping you out financially as well.
Whatever your revenue streams, it’s helpful to create a budget by compiling a spreadsheet of how much money you have coming in and how much you have going out. If you can track how much you’re earning and spending on a weekly or monthly basis, you’ll be better able to stay on top of your finances.
You should include any debts you have on the spreadsheet, such as reverse mortgage line of credit, credit card bills and dates by which you need to pay them. You can also include when you need to pay your rent or mortgage, your utility bills, and so forth. Don’t forget to include your food budget in your calculations, plus your entertainment budget if you have money left over.
3. Figure Out What You’ll Need
People come to live by themselves in different ways. It might be a joyous occasion, like moving into an apartment to start going to college nearby. It could be that you’ve lived with roommates up until now, and you’re ready to strike out on your own.
No matter how it happened, you should have at least a little time before you move during which you can prepare for this life change. You might have hours, days, weeks, or months. Use that period to make a detailed list of what you’re sure you’ll need in your new living situation.
That list might include a bed and other furniture, cooking utensils, and essential appliances such as a stove and a refrigerator. Do you have a lump sum to buy those things? Is there someone who can lend you the money if you don’t have the ready cash to purchase them immediately? Make a plan to save up the funds to purchase the items you’ll need.
Living Alone is a Way to Learn Financial Responsibility
Living solo might be a fantastic experience for you. One thing is certain, though: how well you will transition into this new living situation depends largely on how financially responsible you can be. Taking on some time-tested saving and spending habits will help you make this move without sacrificing financial stability.