Getting Financially Ready to Live on Your Own in MA or RI
Living on your own for the first time is one of life’s greatest milestones. Finally free of your parents’ rules, you are paving your own way and can truly call yourself an adult.
While many young adults are opting to live at home with their parents, you’re moving out on your own and stepping into the real world. As you step into this next stage of life, it’s important that you learn how to be financially responsible so you can establish a foundation that will help you for years to come. Here at Bristol County Savings Bank, we’re providing valuable advice for living on your own in Southeastern Massachusetts or Rhode Island — from budgeting and banking choices to choosing the right place to call home.
Make a “moving out” budget and “living on your own” budget
If you’re moving out of your parents’ house and getting ready to live on your own in an apartment, you’ll need to know how much it will truly cost you to live. A first step is to save up enough cash to afford all the things you’ll soon need for your new home and start building your emergency savings.
To determine your moving out budget, you’ll want to save up at least enough to cover your security deposit on a rental, which is typically first and last month’s rent. But you’ll also need to invest in basics like furniture, curtains, dishes, bathroom supplies and more. There’s a lot you’ll need to buy for your first apartment, so be sure to plan accordingly.
Next, create a budget for living on your own. A good place to start is to crunch your numbers with a cost-of-living calculator or create a budget sheet. Create a simple budget by listing all your expenses, like rent, car payments, insurance, groceries, gas, heat and hot water, etc., and then all your sources of income, like your job or freelance work. This will allow you to understand the real-world costs of living on your own.
Budgeting to balance fun and your future
The point isn’t to live a boring life without enjoyment. Your money gives you freedom of choice, and you should have a good time. But remember to take care of important bills first, such as rent, groceries, MA or RI loan and insurance payments, before you start booking expensive vacations or buying extravagant home entertainment systems. Budgeting boils down to a simple premise: Spend less than you earn. That’s the way to get ahead.
Should you buy or rent?
Arguably the biggest decision you need to make is where you will live and whether you will buy or rent your home. It's no secret that owning a home or condo is another huge milestone and requires a significant financial commitment. You may want to start off by renting to avoid the long-term obligations of having a Massachusetts or Rhode Island mortgage, insurance and property taxes, and affording a hefty down payment and closing costs.
Rent is more of a fixed budget item than home ownership, and occasional rent hikes probably won’t exceed the cost of replacing a roof. And, if both buying and renting seem too expensive, you may want to consider a roommate. Use our Rent or Buy calculator to help you make an informed decision.
Banking tips for living on your own
To get your financial house in order, you’ll first want to make sure you have the best checking account to fit your needs. Whether you still have a student checking account or need to open a new checking account, keep these banking tips in mind.
Pay yourself first: Set aside a portion of your paycheck to go into your retirement or savings account each week. You can set this up with your employer and allocate a portion or specific amount so you won’t even miss it. While retirement might be years away, starting to save early really adds up.
Save for emergencies: The general rule of thumb is to save enough money to cover three to six months of expenses in case of an emergency. This is a tall order for many, but a smart way to live so you don’t end up needing expensive loans in the event of an emergency.
Be careful with credit: You’ll want to build your credit history and make payments on time to increase your credit score. Be mindful not to overextend yourself with credit cards, especially if you are still paying off student loan debt. If you want to buy something new and are tempted to put it on a credit card, try saving up for it instead.
Avoid paying bank fees: If you are paying overdraft fees or monthly fees, you might want to consider opening a checking account with Bristol County Savings Bank that doesn’t charge as many fees, or a checking account or money market account that pays interest.
Protect your financial information: Protecting your sensitive financial information is incredibly important. When you’re going out, bring only the cards and cash you’ll need and don’t carry your social security card on you. Keep that and other sensitive documents—like passports, birth certificates and contracts—in a safe in your house, or in a safe deposit box*. Shred old debit and credit cards and sensitive documents and be careful with checks and checkbooks. Mailboxes are becoming a place where identity thieves will steal your info to open a new account in your name or commit other fraud. Finally, keep anti-virus software updated on your computer, and only pay your bills online when on your private Wi-Fi network.
Living on your own for the first time is an exciting step. Learning to do so responsibly will allow you to spend more time having fun and less time dealing with financial concerns. Enjoy this exciting stage of your life, and remember to set up a budget when you first move out on your own. Don’t be afraid to use Bristol County Savings Bank’s Digital Banking site to help navigate the beginning stages of budgeting and learn more about the flexibility of digital banking.