How to Make Your Own Budget After Moving Out on Your Own
Moving out on your own is a milestone full of mixed emotions. Managing your own money is now a top priority. Indeed, there are countless budgeting strategies, but finding the right one for you can be a challenge. Thankfully, several financial resources are available to help you responsibly manage your money. Learn more about making your budget now that you’re an independent person.
1. Prioritize Savings
Next, prioritize your savings by allocating a certain amount from each paycheck to several accounts. First, sign up for your employer’s 401(k) program and deposit enough funds to match their contribution. Also, start an emergency savings fund at your bank. Ideally, it should have the equivalent of three to six paychecks deposited in the account in case of a job loss. In addition, consider savings accounts for your desired items, such as vacations. Most banks offer automatic transfers from checking to savings for easy account management.
2. Focus on Necessities
About 50 to 60 percent of your budget should be dedicated to necessities, suggests NerdWallet. These items include basic needs, such as:
- Housing
- Utilities
- Groceries
Monthly rental rates are often fixed amounts based on a lease or other contractual agreement. In contrast, utilities can vary each month. For example, you might use more electricity in summer than in winter. Ideally, energy should be conserved whenever possible to lower monthly costs. Apply this same concept to grocery bills. Look for generic products and reduce expensive goods, such as meat purchases.
3. Pay Down High-Interest Debt
Preferably, pay off each credit card balance every month. Don’t carry a balance, which can accrue interest with remarkable speed. If you have high-interest debt, slowly pay off the highest amount first. Then, focus on paying the next highest amount. Although you’ll still pay interest, it won’t accrue as quickly. If credit cards are too tempting to use, opt for debit cards. These cards pull directly from your checking account, so you must have the funds to spend them.
4. Audit Your Monthly Spending
Although it’s easy to set up auto-pay on every bill and subscription, knowing what you’re spending each month is critical. Compare your monthly income to your expenditures. Cancel any subscriptions that aren’t necessary or being used. Focus on shopping habits, too. Eating at home instead of paying for expensive restaurants can help you stay within your budget.
5. Consider Supplemental Income
Lastly, consider adding a side job to your income stream. These extra funds can often help with unexpected costs that arise in life, such as an emergency room visit or other financial obligations. For instance, sell used items online or sign up as a third-party delivery driver. Although this income stream isn’t designed to support your entire budget, it helps when inflation rises and costs for necessities increase.
Overall, spending less than you make is the budgeting goal. Always check your financial statements for any discrepancies so that you’re always meeting your budgeting goals. Living and thriving on your own takes discipline as you encounter spending temptations every day.
