Due to several factors, including student loan debt and the economy’s highs and lows, many don’t believe it’s possible to move out on their own. That’s not true.
Living independently is definitely a dream worth pursuing. You just have to follow a few guidelines for how to save money to move out. The idea is to manage money effectively while saving and investing properly at the same time.
Here are eight ways to make moving out on your own a reality.
1. Get Out of Debt
Before moving out and taking on added expenses, pay down your debt. This helps free up dollars to live independently and boost your credit score. Applying for a rental or mortgage will be easier.
2. Do More with Less
After adjusting your budget and getting rid of extra spending like satellite radio or expensive gym memberships, find ways to do more with less money. This might include running on local (and free) trails to get your daily workout in. Use coupons and buy generic rather than name-brand items at the grocery store. Apply this idea to every aspect of your life.
3. Start a Savings Account
Choose a bank that offers a high interest rate with no minimum balance. You will get in the mindset of saving money right away without pressure to get to a certain dollar amount. The higher interest rate means you’ll make more money on the money you save.
4. Create a Reasonable Budget
Take a good look at how much money comes in each month, and how much goes out. It’s crucial to make sure you’re earning more than you’re spending to save a good chunk for your future. That means reconsidering everything from the gifts you give on birthdays and holidays to the amount you spend on entertainment.
Consider readjusting your priorities and changing some spending habits in order to pay yourself first through savings.
5. Start an Emergency Fund
This can be an important safety net when unexpected crises erupt. An emergency fund can help you deal with emergencies. Take out between 3–5% of your monthly income.
6. Improve Your Credit
You’ll benefit from good credit history whether you buy or rent. Those with solid credit enjoy more options for potential properties and interest rates. You can improve your credit history and score by:
- Getting a credit card and using it for small purchases you can pay off each month.
- Asking your parents or other responsible loved ones to list you as an authorized user on their credit cards. Whenever they make payments on time, it benefits you as well.
- Routinely checking your credit report from Experian, TransUnion, or Equifax. If you see anything suspicious or inaccurate, be sure to report it. Once inaccurate records are removed or adjusted, you could see an increase in your score.
- Keeping accounts open even after you’ve paid them off. Keeping older balance-free accounts current is good for your credit score as well.
7. Sell Some Stuff
Take a look around your room or current living quarters. Get rid of stuff you don’t need. Instead of tossing it, sell it instead. The sky’s the limit! You can list:
- Valuable old baseball cards
- Video games
- Vintage movies
Do this online or schedule a yard sale. Put all the money you earn into your savings account.
8. Reconsider Your Transportation Needs
Consider a monthly or yearly pass if you live somewhere with reliable public transportation. Or maybe carpool with coworkers and split costs. Walk or bike when you can. Every little bit counts.
Are You Ready?
Keep in mind that the money you save will go toward a down payment and closing costs if you’re looking to buy. If you’re looking to rent, you’ll be paying for application fees and first and last month’s rent and security deposits. It adds up.
Is independent living something you can afford right now? Learning how to save money to move out is a wise step in that direction. Seek advice from financially sound loved ones or professionals to determine the feasibility of living on your own.