How to Protect Your Finances When Living on Your Own
Submitted by Chris Haymon - From AdultingDigest.com
(Contributions are guest opinions only and don’t reflect the opinion or endorsement of Money Fit by DRS, our staff, clients or other interested parties.)
Living at home with your parents definitely has its perks. In addition to saving on rent and food, you also get to spend a lot of time with your loved ones. However, there comes a point in every young person’s life when they must move out and live on their own. This transition can be exciting and scary at the same time; it’s a period of learning and growing. Handling money is one of the most important areas in which young people should become proficient. Good money habits can set you up for a financially stable future. Here are some ways in which young people can protect their finances — and themselves — when venturing out on their own.
Save Money for a Down Payment on a Home
Owning a home seems like an elusive accomplishment for many young individuals; it’s commonly regarded as something that should be put off for the future. However, you might actually be surprised how achievable this goal is when you handle your finances properly. It’s a good idea to start saving for a down payment during or after college.
Each year of planned saving will get you closer to owning your own home. You’ll be building equity and not wasting your money on renting a property that will never be yours. While real estate is a great investment opportunity, it does take some time and patience. Start by finding ways to cut your current expenses, plan your savings by month, and pick up extra work.
Plan for the Future of Your Estate
Thinking about unexpected death can seem trivial and even burdensome to some young individuals. And while it is true that there are more pressing financial worries to attend to, there is something to be said about planning for the future of your estate. This is something that can be updated yearly and refined as time goes on, but it is also something that should be taken care of. Life insurance is an important option to consider, as it can yield many benefits for your loved ones. Twenty-year term life insurance policies are solid options for young people who are looking to start a family, as the death benefit can help your loved ones financially. However, it’s important to determine precisely how much you’ll pay in premiums every month so you can figure this number into your household budget.
Solidify and Improve Your Credit Score
Credit scores are a critical measurement of an individual’s ability to repay debts that help businesses determine whether or not to give that particular person a loan or not. Bad credit scores can make it harder to get home mortgages, car loans, student loans, and more. When you venture out on your own, you should start building and improving your credit right away.
The most important step, of course, is to pay your bills on time. Make sure to only place expenses on your credit card that can be covered within a month or so. If you have any current student debt, don’t be late on any of those payments either. Resist the temptation to open many different lines of credit; each time you apply for a new card, an inquiry is sent to the major credit bureaus, which can negatively impact your score.
Protect Your Wallet.
Even though a majority of your money will be housed in a savings account, your wallet still contains a lot of sensitive information and valuables. Protecting your wallet can save you from credit card theft, identity theft, and other headaches. While this may seem like a simple step, it is something that must happen each time you leave the home.
In general, you should never carry too much cash in your wallet. It’s not worth the risk. If you have a need to carry a significant amount of cash, use an internal money belt or something similar. When it comes to protecting your credit and debit cards, make sure they’re tucked securely into designated sleeves. Never let them loose in your pocket or purse.
Moving out on your own can bring about feelings of financial insecurity and stress. With the right strategies, you’ll be able to accomplish this without any troubles. It’s important to always stay on top of your financials, keep track of expenses and payments, and always protect your savings.