Can’t afford to move out of parent’s house?
Moving out of your parent’s home is one of the major decisions you may make in your 20s!
It marks the beginning of your independent living and being responsible for your schedules with no rules or obligations.
Living on your terms does sound exciting but this freedom comes with a huge financial implication.
You got to take care of rent or mortgage, grocery, electricity and other utility bills as soon as you move out.
And with the rising cost of living nowadays, most of the kids in their 20’s or college graduates are finding it difficult to move out of their parent’s house.
So, let’s look at what should you do when you can’t afford to move out of your parent’s house and how should you prepare yourself for this big step!
Action plan: When you can’t afford to move out
According to research published in Financial Digest, one-third of the adults over the age of 21 can’t afford to move out because they don’t have money to pay the rent.
So, as you are progressing towards your first big independent move, here is what you can do to afford to live alone:
Make note of living expenses:
When you start living on your own, there are several expenses that you will have to take care of which you didn’t until now.
Apart from the rent or mortgage payment, you need to pay for water, gas, electricity, phone, groceries and several other bills that you may not immediately think about while moving out.
You also need to consider security deposits, renter’s insurance, personal insurance, vehicle insurance and loan repayments for a student loan, auto loan or credit card debt that you might have accumulated while in college.
You must make a list of your living expenses so that you can plan accordingly and make sure you’re making enough to make ends meet before moving out.
Find a job:
No brainer, you need to have a job or some source of income to take care of your living expenses after moving out.
So, before you start thinking about moving out and you still don’t have a job, you should focus completely on find a job and build an income stream.
If you don’t have a job or if your current job doesn’t pay you well, there are several ways out there to make income even without a full-time job.
If you want to move out comfortably, you need to ensure that you are making decent enough to cover your expenses without asking for any help.
Get on a budget:
The only way you will be able to save enough for your move-out is by getting on a budget.
Firstly, there are many expenses like rent, renter’s insurance, utilities bill, etc. that you don’t have to pay for while living with your parents.
Use this opportunity to start saving and be financially ready for the move out from your parent’s house.
Secondly, while living with your parents, you can observe the day-to-day expenditures they are making. This will give you an idea about the expenses that you will have to take care of when you move out.
You can create your budget based on your observations. This will help you determine how much rent you can afford comfortably or which car you can go for within your budget.
This will help you overcome the feeling of “I can’t afford to move out” and make sure you are financially ready for your big leap.
Set a timeline and stick to it
After reviewing your current financial situation and the steps you are taking to prepare yourself, set a timeline to move out and stick to it.
I know, you want to move out as soon as possible to be independent but if you move out too soon, there are high chances you may not be financially ready and you to move back in again with your parents.
So, setting a timeline and working on financial plan based on that timeline will make your move out smoother.
Start paying rent to your parents:
Most of the time, parents and generous and you don’t have to pay rent to stay with them.
But this doesn’t prepare you for the world you are wanting to step in. So, offer to pay rent to your parents. If they don’t accept, try contributing towards other utilities or expenses.
Acknowledging your financial responsibilities will help you adapt to your new life easily.
If your parents are not ready to accept anything, start putting that money towards savings and you will be able to save up for your security deposit and first rent in no time.
Focus on building an emergency fund:
An emergency fund is important for ensuring a financially independent life so that you have enough funds to face any financial hardships in life.
You have little or no disposable income when you start living on your own and saving money for an emergency fund will be quite impossible.
So, focus on building an emergency fund early on when you still have surplus income in hand.
This will help you get through any emergencies like job loss, medical expenses, etc. without asking for help from your parents.
Pay Off Debt
Debt can be a big hindrance on your journey to financial independence.
Use your time when you are staying with your parents to get rid of as much debt as possible. It is easier to repay the debt when you have fewer expenses than when you are on your own completely.
You can start by repaying high-interest-bearing debt such as credit cards and move on to low-interest debts later. This will help you save more later.
Work on building your credit history:
Finding an apartment on rent without a good credit score is challenging. Most of the times, landlords will ask someone to co-sign the lease with your parents.
Start building on the credit history early on. The best way to do that is by applying for a secured credit card that doesn’t require any credit history.
Use that card to do your expenses and pay them off on a timely basis. This will help you build a good credit core eventually.
FAQ’s on can’t afford to move out of parent’s house
Here are few frequently asked questions on how to afford moving out of your parent’s :
Is it possible to move out with no money?
No brainers, you can’t afford to move out until you have consistent income. The landlord or mortgage company will need proof that you have sufficient income to pay the rent or mortgage payment.
How much money should you have saved before moving out?
Most of the apartment leasing companies ensure that you are making 3 times the rent per month. So, if you are renting an apartment for $1,000, make sure you are making at least $3,000 per month.
And before you move out you need to make sure you have enough saving to pay for:
- Security deposit, first and last month of rent
- Utility expenses like food, gas, electricity, etc. for the first month
- The renter’s insurance and other unavoidable expenditures
Is $5000 enough to move out?
You want to save as much as possible before moving out. Ideally, you would want to save at least three months of rent and living expenses. To be on the safer side, you can go up to 6 months. Based on the cost of living in the city you are living in; it can be anywhere between $3,200 to $5,000.
How do you move out with little money?
If you don’t have enough money to move out, you can try the following tips to make ends meet:
- Stay with a friend
- Sell stuff you no longer require
- Take up a part-time job
- Start working on a side hustle to make extra income
- Move to a cheaper place
- Try cutting down on avoidable expenses
Final thoughts on how to prepare yourself to move out of your parent’s house:
At some point of time in life, you must take the big leap and move out of your parent’s house.
Prepare yourself financially to afford to move out of your parents by following the above-mentioned tips. This will ensure a smooth and comfortable move.