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Leaving Home? Know These 5 Smart Money Tips for Living On Your Own

Before you move into your new digs, make a budget that truly reflects your current income and anticipated expenses. (iStockphoto)

Living on your own for the first time – whether it’s a dorm room or your first apartment – can be fun and exciting. It also means taking on new responsibilities, including managing your money.

If you’ve been wondering how much money you need to finally move out, here are a few tips to help you start “adulting” like you’ve been at it for years.

1. Budget before you move – and then budget again after you’ve settled. Before you move into your new digs, make a budget that truly reflects your current income and anticipated expenses. You’ll already know some expenses, such as the phone bill, car payments and insurance, and you’ll have to estimate others, such as the electric and heating bills.

Use this initial budget to help plan your spending after you’ve moved in. After you’ve lived in the new place for a little while, take a look at your bills and recalculate your budget accordingly. Use a budgeting tool that will automatically import and categorize your expenses, such as how much you spend on fast food and concert tickets each month, giving you a bird’s-eye view of your financial standing in seconds.

[See: 12 Shopping Tricks to Keep You Under Budget.]

2. You don’t need every gadget and appliance. Avoid the urge to immediately reconstruct your living space by buying everything you think you need. Your parents accumulated those stacks of pots and pans over the years. The same is true for all the other gadgets and appliances you’ve gotten so used to. They’re nice, but they’re not essential. Pare down your lifestyle and make sure you’ve got the basics – these are the things you need to keep yourself healthy and happy. It’s also smart to live in your new home for a bit to figure out what you really need, and more importantly, what you don’t need before making big purchases.

3. Weigh quality versus cost. While you don’t need everything when you’re first starting out, you do need some things. When it comes time to make those larger purchases, it’s important to know what you should invest more money on, and what you can buy on the cheap. Here’s where you need to be strategic about cost. You could save money and fill your new place with secondhand things. That may be good in the short-term, but could potentially lead to problems down the line, especially if your cheap starter purchases need to be replaced. Think of your purchases as investments. How will they pay out down the road?

[See: 7 Products to Never Buy in Bulk.]

4. Commit to paying bills on time. Living on your own usually means that you’ll have a whole new set of bills to manage on top of whatever bills you already had. If you don’t have a system in place, it’s easy to lose sight of your bills from time to time and fail to make a required payment. It’s an easy mistake to make, and unfortunately it’s a costly one, too. Set aside time each month (right after you get paid is the best time) and pay all of your bills for the month. Also be sure to sign up for bill reminders – by text or email – so you never miss a payment. Just one missed payment can impact your credit score for years to come.

5. Pay yourself first. Don’t forget to save. Even saving $5 a week is better than not saving at all. Ideally, your goal should be to have money in the bank to cover three to six months’ worth of living expenses. But even if you don’t have half a year’s salary chilling in your bank account, having some money set aside is better than none. There are countless ways to work toward building an emergency savings account, from setting aside loose change at the end of every day and depositing it in the bank at the end of the month, to having a percentage of your paycheck automatically stashed away in your savings account.

Learning how to budget isn’t the most exciting thing you’ll do when first moving out and living on your own, but it can mean the difference between just getting by and making the most of your money, and will get you into habits that will last a lifetime.

[See: 12 Millennial-Inspired Ways to Spend Less.]

What to include in your first budget. Show Mom and Dad that you know how to move out the smart way by creating a monthly budget and sticking to it. Here are some items you’ll want to include.

• Rent: This is most likely your largest single expense.

• Utilities: Consider electricity, gas, water, cable TV, internet and more.

• Meals: These include supermarkets, restaurants, drive-thru restaurants and delivery.

• Transportation: Tally up flights, cab rides, fuel, auto insurance, vehicle registration, et cetera.

• Medical: This includes prescription drugs and co-pays.

• Entertainment: Consider date nights, impromptu adventures and vacations.

• Clothing and toiletries: This includes new clothing, soaps, shampoos, shaving cream and other products.

• Subscriptions and memberships: These include gym, magazines, online movie or music services.

• Gifts: Track gifts for birthdays, weddings, baby showers and holidays.

• Pet Care: This includes annual checkups and flea medicine.

• Savings: Squirreling away a few dollars a week can add up, so make a commitment to pay yourself.

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