Money Smarts: How to Budget Your Income for Independent Living           

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I remember moving out for the first time. There were a bunch of expenses I hadn’t even thought of! When you’re living at home or in a dorm, everything is taken care of for you. Of course, you might share the cost of your cell phone or gas or car insurance, but did you know that your financial backers (aka your parents/guardians) pay for things you didn’t even know needed to be paid for?

When you’re ready to move out, there are the obvious expenses: rent, utilities, car, food, phone; but you have to factor in fun money (movies, eating out, etc) and other miscellaneous spending money (clothes shopping, toiletries). Let’s break this down:

  • Rent: The amount it will cost you to live in an apartment or house.
  • Utilities: When you think of utilities, maybe you think of the lights (electricity) and gas. But, did you know water costs money? And garbage collection costs money? When looking for a new place to live, it’s smart to find a place where water and garbage are included in the rent. What about if you’re renting a house though? Often times, landlords will tell you that the gardener is your responsibility, too.
  • Car: If you’re fortunate to have your own automobile, you’ll have to take several costs into consideration. It isn’t just gas and insurance. There’s the maintenance fee, fixing a cracked windshield if your insurance doesn’t cover it, changing the tires when that comes up, car washes. Don’t forget about your yearly registration fee and, if your car is old enough, your smog check. It adds up!
  • Food: What do you currently spend on groceries? Maybe nothing because your parents buy them or you have a cafeteria card at school? When you’re living on your own, you have to start to think of what food items you actually eat, what you can finish before it spoils, and whether you really need to have it. If you’re on a budget, then maybe you’re allocating $50-75/week for groceries – those Oreos or that steak may not fit into your budget.
  • Phone: You most likely have a cell phone that will need to be paid either monthly or prepaid. But, if you decide to have a landline, you’ll need to pay for the phone company to turn on the jack, set up the phone number, and then pay monthly for that line, including monthly taxes and fees.
  • Fun Money: How much of your budget can you put aside to have fun? This includes going to the movies, amusement parks, vacations, etc. You can’t just throw it all on a credit card and deal with it later. If you don’t have the cash for it now, start saving. Don’t accrue debt just to have fun now.
  • Miscellaneous Spending: You also need to budget for things like new clothes, toiletries, and other expenditures not mentioned above.

The main point of this article is to take into consideration every expenditure that you might come across. Make a budget and stick to it. In order to live independently successfully, you need to know how much money is coming in and how much is going out. By creating a budget, you’ll know what kind of home you can afford and what expenses will come up as the months go on. Relying on credit to take care of the more important things, like food and shelter, will only put you in debt and create bigger problems for you down the road.

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