By Jon L. Ten Haagen, CFP
Q: When I finished college, I found a job, but it is not paying me enough to live on my own. How much money should I have saved in order to be able to move out of my parents’ home?
A: You have to take stock of what it will cost you to live on your own. Will you rent an apartment and live by yourself? Rent a house with a group of friends? What will be the cost of utilities, renters’ insurance, food, etc.? Where can you get the essentials like a bedroom set, couch for the living room, and kitchen necessities? Think about St. Vincent DePaul for slightly used items.
You would be wise to create a budget and balance sheet. What income do you have coming in and what are your monthly costs? Is there a plus sign or minus sign at the end? Do you spend everything each month or are you (can you) save money? I would strongly urge you to have an emergency money account for a rainy day before you move out. What do I own (car, furniture, jewelry, etc.) and what do I owe (car payments, insurance, student loans, etc.)? Once you have the basics down on paper, you can focus on where you can cut back on expenses and which ones are necessary.
Most likely you will want to consider sharing a place with good friends. This costs you less and you can save that much more for an eventual home purchase. You also split the costs of rent and utilities and furniture. Make sure you choose your roommates carefully. Are they reliable in their ability to pay their share? Are they going to share the workload of cleaning, chipping in for groceries, etc.? Do you work similar hours? Does that matter to you?
Create a budget plan. What are the costs of utilities, groceries, renter’s insurance, clothing and kitchen needs? Parents can be a good source for some of the items you need. Discuss all these details with your potential roommates. Create a joint budget together so you are all on the same page.. How secure are each of your jobs?
Do not take the first place you see. Shop around and see what the average costs are. Drive around the different neighborhoods to see if your potential new home is in an area you are comfortable coming back to later in the evening. When you decide on a place, do an inventory of what is broken and what is worn out. Do this with your potential roommates and perhaps a parent to give you feedback.
Most importantly, leave the parental home on good terms. I read a statistic that 65 percent of kids that move out end up back home or homeless in three months or less. Discuss this possibility with your folks and the future will be better for all of you.
Think, plan, strategize, plan again and only move out when you have thought through all the possible ramifications.
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Jon L. Ten Haagen, CFP, of Huntington, is an Investment Advisor Representative offering securities and advisory services offered through Royal Alliance Associates, Inc., member FINRA/SIPC and a registered investment advisor. Ten Haagen Financial Group is not affiliated with Royal Alliance Associates, Inc. or registered as a broker dealer or investment advisor.
Disclaimer: The advice offered in this column is intended for informational purposes only. Use of this column is not intended to replace or substitute any professional advice. This column, its author, the newspaper and publisher are not responsible for the outcome of following any advice that appears here.