Moving out of your family home is one of the biggest adult milestones. However, this dream is a bit harder to reach now as compared to previous decades. 19% of young professionals move back with their parents after graduation. Rising student debt, lack of job security, and cultural upbringing are just some of the reasons why men and women among younger age groups choose to stay at home.
Despite the odds, it doesn’t mean that your dream of striking out on your own is impossible. There are some things that you can put into consideration before taking the next step. Taking note of the factors highlighted below will help you to be more prepared and avoid moving back to your folks’ place one day.
1. Keep existing debt in check
One of the biggest reasons why millennials today move back into their parent’s home is because of the crushing burden of debt, particularly student loans that get harder and harder to pay. That is why many financial experts recommend that you start paying off these loans as early as while you’re still in college. If you have graduated, consider refinancing or consolidating your existing student loans to find a way to make the payments more manageable so it won’t hit you hard once you move out.
2. Grow your savings
Because of their debt and expenses, saving money is something that most young people overlook in their life after graduation. This is especially true with the current generation as they have a shocking negative 2% percent savings rate. If moving out is your goal, make sure you have personal savings of at least 3 to 8 months’ worth your income to finance your independence and live well.
3. Start and maintain a list of expenses
Creating and maintaining a budget is an art and science that you should master before even owning or renting a house or apartment of your own. Thankfully, there are numerous ways now of tracking down your expenses from old school notebooks, simple Excel spreadsheets or different money management apps. This will help you be on top of things like your monthly bills, dues, and even incidental expenses like home or auto repairs.
4. Seek out additional sources of income
Millennials are often distinguished by their love for innovation and entrepreneurial spirit. Why not live up to this positive stereotype and find creative ways to supplement your income? Freelancing and building a side venture are just some examples worth looking into. This will help you build your purchasing power and savings, which can greatly help you once you decide to live independently.
5. Build up your credit score
Taking in more debt after managing to pay off most, if not all your student loans may sound counterintuitive at first. However, building your credit score through loans and other types of financing can help institutions build trust in your ability to pay your own rent or mortgage, which will help you in the long run.
Moving out and living your adult life to the fullest is possible when you make the right decisions with your finances. All you need is to keep yourself informed and open to different options that can lead you to your goals.
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