Tips and Tricks to Afford Living on Your Own After College
Did your parents support you financially throughout college? If so, you’re probably eager to spread your wings and provide for yourself. Being on your own without a safety net may be your first real adult experience and relying entirely on yourself for the first time isn’t always a walk in the park. If you want to strike out on your own and leave (and stay out of) their house, here are five tips to afford living on your own.
Don’t expect to have your parent’s life immediately after college. Like most people, your parents probably struggled during their early years together, and it probably took them awhile to acquire a certain standard of living. Realistically speaking, you probably won’t have the resources to buy a spacious home or an expensive car after college. And if you get ahead of yourself and try to keep up with your parents, you can accumulate a ton of debt, which is the easiest and fastest way to end up back home.
Pool your resources
Going from zero bills (or very few bills) to fully supporting yourself can come as a big shock. But you can soften this blow with a roommate. Living with another person may not be your ideal situation. This, however, can make your post-college transition easier. Being on your own involves more than paying your rent and utilities. You have to eat, put gas in your car, buy insurance, plus deal with unexpected expenses. And sometimes, an entry-level salary won’t cut it. A roommate offers the best of both worlds: you can move out, yet not stretch yourself too thin.
Start saving your money
A roommate sharing the expenses does not justify frivolous spending. You’ll acquire more responsibilities as you become older, and the more responsibilities you have, the harder it will be to save money. Take advantage of the time immediately after college and create a financial cushion. This can jump start retirement planning, help you buy a house sooner or build funds for a rainy day. Deposit 10% of your pay into a savings account, talk to your employer about contributing to a retirement savings plan and look into individual retirement accounts.
Learn how to cook
If you’re living on your own, you may conclude that it’s easier and faster to grab a meal each day. This is especially convenient if you don’t cook. But eating out on a daily basis isn’t exactly healthy or cheap. Eat out even once a day and you can easily spend $70 a week at restaurants – that’s nearly $300 a month. But with just you, $70 could also buy two week’s worth of groceries. Prepare your meals at home and reduce your food budget by half. The savings can pay a bill or grow your bank account.
Use credit cards wisely
Make sure to have at least one credit card in your name so you can build your credit history. But before you apply for a credit card, make sure you understand how to use them responsibly. Too often, new graduates take on too many expenses too quickly. And when they discover that they cannot afford a certain lifestyle, they bridge gaps in their income with credit cards. Big mistake, as huge credit card debt results in massive interest charges and a lower credit score. If you max out several credit cards, you may not have enough income to make your minimum payments. At which time, moving back home may be the only way to avoid default and a damage credit score.