You don’t have to be a devout consumer of current events to know that times are tough. The COVID-19 pandemic, inflation, student loan debt, and a skyrocketing housing market have left many people struggling in the United States.
As a result, the share of the U.S. population living in multigenerational households grew to 18% last year. That’s more than quadruple the percentage of multigenerational households in the 1970s. There are now more young adults (ages 18-29) that live with their parents (52%) than at the end of the Great Depression (48%).
Unfortunately, the issues causing these trends haven’t shown any signs of slowing down. If you’re considering moving out, you should know that it will probably cost you more money now than ever.
That’s why it’s vital to seize the opportunity to save as much money as possible.
How To Know You’re Financially Ready To Move Out
- You Can Afford Your Rent/Mortgage With Your Current Job
- You Have a Good Credit Score
- You’re Able to Manage Your Debt
- You Can Cover All of The Unexpected Expenses
- You Have Reliable Transportation
- You’ve Got Enough to Buy the Necessities
- You Have Enough to Cover the Cost of Moving/Buying Furniture
- You’ve Got Savings for a Rainy Day
There are a tremendous amount of factors that you’ll need to take into consideration before you can successfully move out. The last thing you want to do is move out, go broke, move back in, and start all over again.
You must be 100% sure you’re financially stable enough to afford your place. Here is a checklist of the eight things that you need to have before you’re financially ready to move out:
1. You Can Afford Your Rent/Mortgage With Your Current Job
Most of your income will go toward your rent or mortgage. The housing market and rental rates have only gone up in recent years. The exact amount you pay can vary based on several factors, but you’ll likely be paying more than $1,000 monthly in living expenses.
Ideally, you should make enough money that only 30% of your gross monthly income goes toward your rent. If you're looking at places where you’d be spending more than 30% a month on rent, you either need to look elsewhere or apply for a higher-paying job.
2. You Have a Good Credit Score
Whether renting or buying, you must have a high credit score. The three-digit number that pops up next to your name can significantly impact the odds of your rental/mortgage application getting accepted. It can also affect your money in the form of interest rates for a mortgage and security deposit for a rental.
The benefits of having a high credit score far outweigh the sacrifice you might need to make to get it. It would be a wise decision to try and improve your score as much as possible before you attempt to move out.
3. You’re Able to Manage Your Debt
The average American is about $90,460 in debt, but the average can change depending on age. If you’re one of the few hundred million Americans with debt, you should try your best to pay it down as much as possible.
The goal is to either completely pay off your total debt or reduce it enough so that your debt-to-income ratio is less than 43%. A higher ratio can be challenging to manage correctly and could land you in hot water if you start to fall behind.
4. You Can Cover All of The Unexpected Expenses
There are a lot of unexpected bills you’ll need to pay whenever you first move in. You probably already know the anticipated rent/mortgage payment, but have you planned for security deposits, renter’s insurance, background check fees, or credit check fees?
That’s not even mentioning the future recurring expenses of electricity, internet, cable, gas, garbage pickup, and HVAC. Remember that there are no grace periods for these unexpected expenses, and you’ll need to pay each one of these bills upfront.
5. You Have Reliable Transportation
Having reliable transportation is essential in modern life. Living in a city can be beneficial as you won’t necessarily have to own your vehicle. However, you’ll need to ensure that you can easily get around without it and have the money to pay for the costs.
Things get a little more tricky when you are trying to move to an area without reliable public transportation. It might be a good idea to purchase a car before moving out. Having a monthly rent or mortgage payment can make it pretty hard to pay off a car loan.
6. You’ve Got Enough to Buy the Necessities
There are two days when your new place will be empty: the day you move in and the day you move out. No matter how long that period is in the middle, it will be full of all your stuff. The problem is that stuff can get quite expensive when you have to buy a lot.
You’ll naturally accumulate stuff slowly over time, but that first month will require a lot of new purchases. You’ll need
- Pots
- Pans
- Plates
- Utensils
- Cups
- Paper towels
- Trash bags
- Trashcan
- Dishwashing soap
That's not even mentioning all the food you’ll need to buy!
Then you’ll need to add toilet paper, laundry detergent, light bulbs, cleaning supplies, and about a thousand other things to get you through the first few weeks. You’ll be taking many trips and spending a lot of money each time.
7. You Have Enough to Cover the Cost of Moving/Buying Furniture
Moving can be quite a hassle depending on how much furniture you have. It’s often very large, very awkward, and very heavy. You’ll most likely need to get a truck and make several trips. On the other hand, having virtually no furniture isn’t exactly a dream scenario either.
The reality is that moving is kind of a guaranteed losing situation no matter your current furniture status. Having a bed, couch, dresser, and whatever else will require the help of movers or a fantastic set of friends.
Having no furniture will be much easier to settle in, but you’ll need to spend a ton of money buying new furniture. Either way, you’ll pay in cash, sweat, or an unpleasant combination.
8. You’ve Got Savings for a Rainy Day
If you have made it this far on the checklist, you are very close to moving out. The last little thing you’ll need to ensure is that you have some money saved up in case of a rainy day. The more you have in savings, the better, but try to aim for at least six months of your essential bills.
You don’t want to enter a new living situation wholly tapped out on all your liquid cash. Setting aside a little money can help keep you from getting wet on a rainy day. It can be much more than an umbrella, depending on where you choose to save your money.
What Are Some Ways To Save Money Faster?
- Create A Detailed Budget
- Cut Out As Many “Wants” As Possible
- Get Another Job
- Use Yotta
Money-saving challenges are all the rage and can be a great way to stack up extra cash quickly. But if you want to get down to business and increase your savings, then you’ll need to make the following changes:
1. Create A Detailed Budget
The first part is to create a highly detailed and strict budget that you stick to no matter what. You’ll need to collect as much financial information as possible from the last few months to make your budget as accurate as possible.
Separate every dollar into one of two categories: income and expenses. Income is any amount you earn monthly (wages, public assistance, child support), and expenses are anything you spend each month (bills, food, debt payments).
2. Cut Out As Many “Wants” As Possible
Take a look at your list of monthly expenses. You’ll need to separate them once more and place them into two different categories: wants and needs. Needs are expenses that you have to pay for each month.
Housing, food, insurance, medicine, transportation, and debt payments are a few examples of needs. Wants are expenses you can do without, such as traveling, entertainment, monthly membership, and dining out.
The hardest part of your money-saving adventures will be eliminating as many of these desires as possible. There is no understanding that these sacrifices will be tough to make and maintain. However, it’s the fastest and most effective way to save enough money to move out.
3. Get Another Job
The next step is going to be to try and increase your income in any way you can. Cutting your expenses will help you save money, but combining that with another job will yield twice the results.
The benefits of picking up a second job work twofold: you’ll be bringing in more money than usual, and you won’t have the opportunity to spend as much. It might seem like a hassle to spend even more of your time at work, but that’s what it’s going to take to have enough money to move out.
4. Use Yotta
You’ll probably notice the changes to your bank account pretty soon. The problem with leaving your money in your bank account is that the cash will stagnate. Most banks' interest rates are so low that the money will be collecting dust.
That’s why it’s a good idea to look into opening a Yotta account. Not only will you be able to earn 4% interest on your balance (much higher than traditional banks), but you’ll also be entered into the weekly sweepstakes drawings where you could win up to $10 million in cash.
The more money in your Yotta account, the more tickets you’ll get, and the more likely you’ll win a cash prize. You won’t find a better incentive to save your money than that!
Start Saving Today so You Can Move Out Sooner
The path to moving out on your own can be frustratingly long and full of many unexpected twists and turns. Trying to figure out the exact amount of money you need before moving out will require a lot of calculation, but it’s safe to say it will be a lot.
Making some of the above changes can help you save money and slowly cover each part of the checklist. On the other hand, you might get lucky, hit the Yotta sweepstakes, and have enough money to buy an entire neighborhood.
Open your Yotta account today so that you can enter the next drawing. Hard work and sacrifice will eventually help you save enough money to move out, but a little luck can give you a much faster shortcut.
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