How To

How to Make a Budget for Living on Your Own

If you can’t wait to move out of your parents’ home and start living on your own, you’re not alone. Independence is amazing, but enjoying that newfound freedom can be more expensive than you might think. Fortunately, there are tons of helpful websites and mobile apps that can make managing your finances fun. And by incorporating these tools in your everyday life, you can develop a realistic budget and start saving money for the things you enjoy.

If you’ve been asking yourself “How much money do I need to move out?” here are a few tips to help you start adulting like you’ve been at it for years.

Common Mistakes When Moving Out for the First Time

Perhaps the biggest mistake young adults make when moving into their first apartment is not making a budget. The principle is simple: First find out how much income you’re earning each month, and determine how much you’re spending and on what. Then, based on those numbers, set aside a certain amount of each paycheck for rent and utilities, and actively track your spending so you don’t run out of cash.

Budgeting apps like Mint automatically import and categorize your expenses (like how much you spend on fast food and concert tickets each month), giving you a bird’s-eye view of your financial standing in seconds. You can also use a notebook or spreadsheet to track your spending if you prefer to kick it old-school. The point is, creating and sticking to a monthly budget is the single best thing you can do to prevent a financial catastrophe. It might even be among the most valuable life skills you’ll ever develop.

Another big mistake young adults make when first moving out of Mom and Dad’s is not saving any money. You might wonder what the point of saving is if you only have a handful of dimes left over from each paycheck. But even saving just $5 a week is better than not saving at all. And you’ll definitely thank yourself for having stashed away that cash when your car starts making weird noises or if you sprain your ankle at a music festival.

Paying bills late is also common among the newly independent. Avoid this nasty habit by setting up reminders on your smartphone or using an online calendar to alert you a few days before bills are due. Or, better yet, start paying your bills as soon as they arrive. Not only are late-fees crazy expensive, but if you regularly miss due dates, you could be crippling your credit score. Paying a bill late, even if only by a day or two, makes it more expensive to borrow money when you want to finance a car, house or some other major purchase. Look out for your future self by paying your bills promptly.

Preparing for Expenses You Hadn’t Considered

In order for a budget to work, it has to account for everything you spend money on. This includes little things like parking lot fees, late-night drive-thru meals and random convenience-store purchases. Like to rent movies on the weekend? Add it to your budget. Tend to drop a few bucks on mobile apps or lotto tickets each month? Include those as well.

Those living away from home for the first time are bound to face a flurry of unexpected expenses during their initial months of independence. In the kitchen alone, you’ll likely need to invest in dishes, cookware, and a dozen ingredients to stock your pantry. And when it comes to keeping your home looking good, it’s easy to underestimate the cost of cleaning supplies. Netflix and Spotify subscriptions are also often overlooked, as are annual bills like vehicle registration and tax preparation. To create a realistic budget, you should first spend some serious time looking at last year’s expenses to make sure you’re not missing anything.

"Living on your own for the first time can be an epic--and expensive--experience. Learn how to move out the smart way by budgeting like a boss." -MintLife Blog

Money-Saving Tips for Moving Out at 18

Here are a few basic ways to cut back on expenses during your first years of independence.

1. Don Your Chef’s Hat

Cooking your own meals on a daily basis can save you more money than just about any other change in your behavior. Knowing how to make five basic meals (say, chili, tacos, chicken and vegetables, spaghetti with marinara sauce, and a slow-cooked roast with veggies), and having a microwave handy for reheating leftovers, can cut your food expenses in half. An added bonus: Homemade food is almost always healthier than prepared meals.

2. Kill Some Kilowatt Hours

Get into the habit of turning off—or even unplugging—lights, appliances and electronics when you aren’t using them. And consider getting a programmable thermostat to keep heating and cooling costs down.

3. Quit Using Credit

Only carry one credit card, and commit to only using it in absolute emergencies. Using cash or a debit card for day-to-day expenses prevents you from overspending and accruing budget-busting interest charges.

4. Explore Other Avenues

Consider all your transportation options. Do you really need to drive everywhere, particularly if you have to pay for parking once you get there? And with Uber, Lyft, Car2Go and other ride-sharing services now widely available, city dwellers might even consider ditching their cars completely. The cheapest gallon of gas is the one you don’t use.

Things to Include in Your First Budget

Show Mom and Dad you know how to move out the smart way by creating a monthly budget and sticking to it. Here are some items you’ll probably want to include.

  • Rent: most likely your largest single expense
  • Utilities: electricity, gas, water, cable TV, internet, etc.
  • Meals: supermarkets, restaurants, drive-thrus and delivery
  • Transportation: flights, cab rides, fuel, auto insurance, vehicle registration, etc.
  • Medical: prescription drugs, co-pays, etc.
  • Entertainment: date nights, impromptu adventures, vacations
  • Clothing and toiletries: new threads, soaps, shampoos, shaving cream, etc.
  • Subscriptions and memberships: gym, magazines, online movie or music services
  • Gifts: birthdays, weddings, baby showers and holidays
  • Pet Care: annual checkups, flea medicine

You Need a Financial Cushion

A good rule of thumb you might’ve heard is, in the event of an emergency, everyone should have a financial cushion substantial enough to cover three- to six-months of living expenses. And while there’s no arguing the soundness of that advice, many people think that’s simply not possible and they don’t even bother trying.

But even if you don’t have half a year’s salary chilling in your bank account, having some money set aside is better than none. There are countless ways to work toward building an emergency savings account, from setting aside loose change at the end of every day and depositing it in the bank at the end of the month, to having a percentage of your paycheck automatically stashed away in your savings account. Start now, and even if you only save a few dollars a week, it will add up over time, and help you avoid financial hardship later on.

Learning how to make a budget isn’t the most exciting thing you’ll do when first moving out and living on your own, but it can mean the difference between just getting by and making the most of your money.

Not using Mint yet? Download our free app today and you’ll be budgeting like a boss before you know it.