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After four years of the freedom of college, it can be challenging for some people to move back in with their parents, so after graduation, you may wonder if you have enough money to live on your own instead of with your parents. It is essential to move out only if you can financially support yourself, since otherwise, you may find yourself back at home.
Taking Care of Debt
Many students have to start paying back their loans as soon as they have graduated, and the amount you will need to pay back can significantly impact your budget. If you have considerably more debt than income, you might not be quite ready to move out. After your expenses are paid, any additional money will also need to go into debt. This might not leave enough money to pay your rent or other bills. On the other hand, if your debt is manageable, you could start to pay it down so you can move out sooner aggressively. If you want this option to work, you will need to have a play for repaying your debt. One option would be to refinance your student loans into a new loan with the help of a private lender. You might get a longer repayment period, or you may get a lower interest rate.
Being Able to Make Rent
You have to be in a good financial place to qualify for a rental home. Often, your income needs to equal or exceed three times the home’s monthly rent. This can also help you determine if you are ready to rent a place. For example, if you are paying $1,000 in rent each month, it’s a good idea to be bringing in at least $3,000 a month. This could be the income from your full-time job or from your current position and a side hustle. If you are looking for ways to save money on rent, another option is to get roommates to cut down the cost of the rent.
Covering Your Bills
Before you decide to leave home, make sure you can afford the costs of being on your own. Come up with a budget for all the expenses you might incur. Write down your current expenses, as well as your current income. Make sure you also include additional living costs on your own, such as transportation, utilities, rent, and food. Living on your own might require you to avoid spending money on non-essentials such as entertainment or going out with friends.
Having an Emergency Fund
It’s essential to have an emergency fund established. You can use these funds to pay for unexpected expenses, such as medical bills or car repairs. You won’t have to use your retirement funds or go into debt to cover these costs. You should have around six months of living expenses saved up in this fund before living independently. If you are committed to building this fund, it should not take you too long to do so, especially if you work it into your existing budget.
