A Young Adult's Financial Guide to Moving Out of a Parent's Home
Economic times are difficult in America today, and so many young people are finding themselves in a vexing situation when it comes time to leave their parent's home. Unlike their parents, the youth of today face incredibly expensive prices on fuel, food, clothing, and many other basic necessities. This often creates and unforeseen problem in our society where young people find themselves unable to launch themselves into their adult independent life. There is hope for these individuals who are struggling to achieve independence through frugal practices implemented into their lives.
I'll never forget in my early adulthood in the late 90's how difficult it was to make financial ends meet. How I wish today that I could take a time machine back to speak to myself for a grand total of 15 minutes in order to change my life for the better for years to come. I realize today that I was completely uneducated on frugality and how the world worked during these very early adult years. It wasn't entirely my fault, but more of the fault of a society that failed to put an emphasis to people the importance of contentment and self sufficiency.
Today I'm going to speak to you young adults who have just left or are about to leave your parents home to help you in ways that nobody ever taught me regarding finances. There are many strategies that may sound very odd and strange, but I assure you that these aren't the typical things that you are taught to be more frugal.
I sit today in my own testimony in my mid 30's. I'm not rich, but I've paid off my home, I work 2 days a week, and I have 5 children. I have never taken a government hand out. I also have no vehicle payment, a dirt cheap electric bill, and most would say that my family (me, my wife, and 5 children) live within our means. Believe me when I say, our income is NOT high either. The following steps will absolutely help you in your life if you are able to keep a stout discipline and swallow some pride in order to complete them.
1. Forget going out to eat!
Learn how to cook! Of course, this is much easier said than done. This is one of the primary causes of my early adult financial problems. My wife and I went out to eat a lot at both restaurants and fast food establishments. What we did not realize at the time was that it's astronomically cheaper to prepare foods at home, even in large quantities, and save leftovers for later. We would think that $5 for a burger, fries, and soft drink was pretty close to the same price as store bought food, but what we did not consider is that every single dollar mattered, and food bought in quantity and saved can feed us the same meals we were buying for 10% of the cost.
We learned to shop at cheaper grocery stores such as Aldi and sometimes Walmart, and to never shop at the luxurious types of grocery stores that are there primarily to be fancy. We started buying foods at places such as Sam's club and Costco (yes the memberships do cost), but the meat you can buy in large quantities and freeze in smaller baggies. Always buy meats in bulk and freeze them!
One of the best steps after moving out of our parent's home for frugality was learning how to make our own bread. As bizarre as it may sound, and never imagining myself doing cooking like this, I decided to give it an honest try. We were motivated to try it because after adding up the finances we figured baking our own bread would save us money over the cost of store bought. A loaf of bread at the store was $1.79 (at the time) and we could make the same thing that was fresh & tasted better for ten cents! At first we made bread by hand, which was a bit tougher, but it is pretty easy to make a good loaf of bread in a Kitchen Aid mixer and make French style loafs on a cookie sheet. The flour we bought in bulk at Aldi (we found they were the least expensive) and the yeast is the least expensive at Sam's club. Have a good simple bread recipe that doesn't require milk and you will be making all the pizza, buns, and bread that you want. There is a learning curve, but once you get the hang of doing it, you'll be extremely glad that you learned how to make bread, and your wallet for the rest of your life will thank you.
I promise that you'll be amazed by just learning how to cook how much money you can actually save. My family of 7 today is all well fed and by use of frugal food shopping, home cooking, and implementing frugal recipes into our weekly menu, our grocery bill is around $75 to $80 a week! When my wife and I use to go out to eat, we could easily spend that amount of money on a weekend by visiting fast food and restaurants. So please, if you want advice from me talking to myself back in time you "nest leavers", learn how to cook!
2. Suck up your pride!
It has been written that pride is a deadly sin. Well this is true not only for your soul, but for your wallet. Due to pride, I have seen countless people in my adult life drive themselves into financial ruin. They are always concerned with "how they appear" and "what other people think of them". Many of these people will take on immense amounts of debt in order to gratify their pride filled egos. Always purchase things out of need than want. If you need a vehicle for instance, think of what will be most practical to serve your needs rather than buying something because you think it will be fancy. Truly what we need in terms of vehicles is something to get us from point A to B, is reliable, and has heating and air conditioning. Those are decent factors that most people would agree with are important in the vehicles that they purchase. However, so many people go after the Lexus and Cadillac brand names namely to enhance their persona of wealth, feed their pride, and drink from the ponds of greed.
If most people agree that the A to B car with reliability and climate control is what we need, a nice stripped down in feature Toyota, Honda, or Subaru will absolutely serve you well. If you purchase a vehicle that is slightly used and avoid the pride of buying a new car, you'll be saving a fortune.
Pride also will harm you in the terms of the apartment, home, or dwelling that you will live in. People often want the best right away and will succumb to going into heavy debt just to get it. My advice is to try to acquire a home that is well within your means, even if you have to go into a slight amount of debt, but never get into renting a home, as many will argue, you are only wasting your money. Here in the south, a person can buy even a single wide mobile home (they are nicer than you think) on one acre of land for around $18,000. The mobile home would be remotely new at that price as well. Some people label a mobile home instantly as "trailer trash", as they sit on a 30 year mortgage working themselves to the bone so long that they'll never have time to enjoy their "yuppie" home.
I would always argue that a starter trailer home is only a small step to get something paid off as quickly as possible. Living in a starter trailer home is an excellent way for a young adult to live independently from their parents and keeping expenses low so that savings can grow for a full cash down buy on a future home. It may take you a decade to save for a home using this advice, but once you do, you'll have a nice new home completely paid off. Consider once you move, that you will have your old mobile home that you took care of to sell, for a nice cash injection into your bank account after you spent your savings on a new house. Don't let pride convince you that you can't settle for a much smaller home or a mobile home.
3. MPG in your vehicle is extremely important!
When I first left the nest, gasoline was only $.96 a gallon. Somewhere overnight is when the prices have seemed to leap to astronomical amounts. It still baffles me today that I see so many people driving around larger vehicles and pickup trucks. In fact, I'm baffled by many people who drive around vehicles with a V-6 engine in them who don't really need them. When you look at gas mileage, it is important to calculate just how far you actually drive, and consider every single dollar that is merely burning into thin air. Gasoline is one of those things that is burned away and you'll never get it back, you won't have any of it to sell later, and it is expensive. Gasoline can literally eat up your savings, and leave you feeling depressed at your finances.
The one thing I would do differently as a young adult (yes even with $.96 a gallon gas), is to buy a very fuel efficient foreign made car with great reliability so that I'd save money on gas. I'd get a stripped down model of an ultra reliable car, drive it like a baby, and take care of it. In today's world, something as an example would be a used Toyota Yaris. You can buy a low mileage one (under 50k) for less than $8,000, they have great reliability, and very good gas mileage. Consumer reports rates these types of cars as excellent in reliability, so you should be able to avoid mechanical issues. My choice would also be to buy a standard shift one, because they get slightly better gas mileage and don't have an expensive transmission if one should ever fail. I would also implement some "hypermiling" techniques in my driving, to help stretch out the gas mileage further. Remember, the more you save on gas, the more money you'll have for savings or other things. Every penny you save will matter.
4. Avoid monthly payments as much as possible!
I don't recall how many times I have seen so many adults go out and carelessly sign themselves up on different types of contracts which gets them bound into monthly payments. It's almost ridiculous the care free attitudes that they have when they say "It's only $45 a month", and never consider the ultimate price that the payments are costing them annually. These payments are often avoidable by using many conservative measures which will have you saving your money!
An example of this would be on a cell phone payment. If a young adult who is moving out of their parent's home were just to buy a conservative pre-paid cell phone instead of getting into monthly contracts, it would absolutely help them financially a lot. My prepaid cell phone costs me $20 every three months, and my annual price is $80. This is because I've learned the fine are of "getting to the point" of the phone call rather quickly and politely, and never carrying on a long conversation. Many other people will happily put $50 a month into a cell phone, which will cost them $600 a year just to have the ability to babble on for hours rather than getting to the point.
I'd also suggest to cut down on any unnecessary features and gizmos that many think they need but don't. Eye and ear candy will cost you money, and the ultimate goal in terms of finances for many people leaving the nest is to be able to simply "make it work". All of your savings and all of your frugality will pay off immediately, and through contentment of simplicity of living for years without, can very well pay off greatly in your financial future.
5. Avoid debt as if it were a ravaging beast!
The lenders are out there like wolves waiting for the young deer who they can "help" as they begin their journey into the world. The deer seek out the mega financial resources that these wolves so happily provide. At first the deer are incredibly excited, as everything is brilliant, new, shiny, and works well. Little do the poor young deer know, these wolves are slowly eating at them as time passes. The deer continue to work every day to repay the wolves, and as they pay, they have to give the wolves more back than the wolves initially gave them or else the wolves would eat them. Finally as the deer repays the wolves, the deer realizes that their shiny new stuff is no longer new, but worn and broken, so they go again to the wolves and repeat the cycle of debt.
When a young person gets into the world, it is very important that they try as hard as they possibly can, with all their might, with all their discipline, to avoid ever going into debt. If they step out into the world and get into a car payment, around the time they are done repaying the loan, their old car will seem like it is getting old and worn out. The problem with debt is it seems like easy money. What is a car payment of $389 a month for years when you consider that a new car is $30,000 up front? It's a ridiculous cycle that I see so many adults in. It's destructive to finances, makes no sense, and will have you enslaved into the debt system for life.
The best advices I can give is swallow pride, and seek out used but solid mechanical vehicles that you can pay cash for. This will avoid you to have to encumber interest payments, and will also allow you to have liability insurance instead of full coverage. A used car with good MPG that has great ratings for mechanical reliability will be your best bet. Never get into the debt game, especially for vehicles or stuff.
Sometimes housing can be a different issue. In an ideal world, living at a parent's home (and help contribute some costs to your parents) while saving for a 100% cash buy on a home, would be your best bet. To never succumb to the vicious banking cartels of the world which will embed you into endless debt circles of financing and refinancing amongst other dependencies will prop you up on an enormously high pedestal above most of society on a financial basis. Unfortunately, sometimes it does not work out this way and for various reasons people will need to leave their parent's home early.
For the people with strong discipline, you could always seek out incredibly cheap housing. I've known people to purchase very dated RV vehicles and go live in a mobile home park for 3-4 years until they could afford a 100% down payment on a basic frame house. I thought it was a brilliant idea, and the two individuals that I've known who had done just this both live in moderate 3 bedroom homes that are paid off at 25 years old. They are not fancy, but they are paid off.
Always remember that every debt comes with interest, and interest is usury, which is often just depleting an individual's finances because they couldn't settle for less.
Using these strategies could help many young adults who are moving out of their parent's home to flourish financially early on. We each have to decide what the outcome of our finances will be in the future. To have contentment and good home economics skills in a person's young adult life, can help them save money and avoid debts. These strategies are an excellent guide to help somebody leaving the nest to achieve better financial success than people who are often highly paid. Frugality and contentment can lead to financial freedom and early retirement if a young person can just take charge and decide to implement money savings strategies into their lives.
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