How to Financially Prepare for Living Alone
Determine your net income., Plan on spending at least half of your income on rent and utilities., Calculate your food costs, cell phone bill, and other monthly expenses., Don’t forget to pay off debt., Try to save at least 10 percent of your...
Step-by-Step Guide
-
Step 1: Determine your net income.
If you make a salary or otherwise make a regular income, it’s fairly easy to determine your net earnings.
Just multiply your regular paycheck after taxes by 26 if you get paid biweekly or by 52 if you get paid weekly.
If your income varies week to week, average your earnings after taxes over the course of the last year.If you want to make a more conservative estimate, use your lowest monthly income during the last year to set your budget. -
Step 2: Plan on spending at least half of your income on rent and utilities.
You should spend no more than 20 to 30 percent of your income on rent or mortgage.Plan on spending at least another 20 percent on utilities, like electricity, water, heating, and cooling.For example, if you make $4,000 (U.S.) per month, you should cap your rental budget at around $1,200.
If you live with your parents, ask them about their utility expenses to get a feel for your projected costs. , Take note of the costs of your cell phone bill, auto payment, and other fixed expenses.
Other than downsizing your cell phone plan, you don’t really have much room to negotiate these expenses.
Food, on the other hand, is a more flexible part of your budget.Try to budget about 30 percent of your budget for these expenses. , Having a good credit score is vital to renting or buying a place to live.
If you have credit card or student loan debt, don’t forget to budget for your payment.Try to budget about 10 percent of your income for debt repayment.
If necessary, try calling your loan servicer to arrange an income-based payment plan. , Do your best to adjust your budget to make some room for savings.
You’ll want to establish a cushion in case of emergencies, from medical issues to job loss.Fitting room in your budget for savings might be impossible immediately after setting out on your own.
You’ll likely be spread thin due to moving fees, furnishing your new place, and buying incidentals, from baking soda to pots and pans.
Set a goal to start saving within three months of moving. , If you’re an Excel wiz, you can create your own spreadsheet to calculate your costs and adjust them to your net income.
However, the easiest way to go is to use a tool like Mint or You Need a Budget.Adjust your numbers if necessary so you know you earn more than your planned budget.
For example, decrease your projected food costs by $50 if you need a little wiggle room. , Once you’ve set your budget, stick to it.
Don’t be tempted to splurge on nights on the town or a new gadget.
Cultivate discipline and perseverance, and remind yourself that being financially independent is more important than an unwise purchase. -
Step 3: Calculate your food costs
-
Step 4: cell phone bill
-
Step 5: and other monthly expenses.
-
Step 6: Don’t forget to pay off debt.
-
Step 7: Try to save at least 10 percent of your income.
-
Step 8: Use a budgeting app.
-
Step 9: Spend wisely and with discipline.
Detailed Guide
If you make a salary or otherwise make a regular income, it’s fairly easy to determine your net earnings.
Just multiply your regular paycheck after taxes by 26 if you get paid biweekly or by 52 if you get paid weekly.
If your income varies week to week, average your earnings after taxes over the course of the last year.If you want to make a more conservative estimate, use your lowest monthly income during the last year to set your budget.
You should spend no more than 20 to 30 percent of your income on rent or mortgage.Plan on spending at least another 20 percent on utilities, like electricity, water, heating, and cooling.For example, if you make $4,000 (U.S.) per month, you should cap your rental budget at around $1,200.
If you live with your parents, ask them about their utility expenses to get a feel for your projected costs. , Take note of the costs of your cell phone bill, auto payment, and other fixed expenses.
Other than downsizing your cell phone plan, you don’t really have much room to negotiate these expenses.
Food, on the other hand, is a more flexible part of your budget.Try to budget about 30 percent of your budget for these expenses. , Having a good credit score is vital to renting or buying a place to live.
If you have credit card or student loan debt, don’t forget to budget for your payment.Try to budget about 10 percent of your income for debt repayment.
If necessary, try calling your loan servicer to arrange an income-based payment plan. , Do your best to adjust your budget to make some room for savings.
You’ll want to establish a cushion in case of emergencies, from medical issues to job loss.Fitting room in your budget for savings might be impossible immediately after setting out on your own.
You’ll likely be spread thin due to moving fees, furnishing your new place, and buying incidentals, from baking soda to pots and pans.
Set a goal to start saving within three months of moving. , If you’re an Excel wiz, you can create your own spreadsheet to calculate your costs and adjust them to your net income.
However, the easiest way to go is to use a tool like Mint or You Need a Budget.Adjust your numbers if necessary so you know you earn more than your planned budget.
For example, decrease your projected food costs by $50 if you need a little wiggle room. , Once you’ve set your budget, stick to it.
Don’t be tempted to splurge on nights on the town or a new gadget.
Cultivate discipline and perseverance, and remind yourself that being financially independent is more important than an unwise purchase.
About the Author
Frank Wells
Professional writer focused on creating easy-to-follow cooking tutorials.
Rate This Guide
How helpful was this guide? Click to rate: