Moving out of home is an exciting time that’s full of adventure. But without your parents paying the bills, you’ll need to take responsibility for managing your own money. Here are some essential skills you’ll need to succeed.
1. Budget like a pro
Living out of home means you have to pay your own bills. There are rent and utilities, and perhaps a student loan taking a bite out of your pay cheque. You’ll need to budget accordingly and plan your spending carefully to make sure you have enough left in the bank at the end of the month to cover it all. Fortunately, free apps like Pocketbook and TrackMySPEND can help you keep tabs on your money.
2. Be a good housemate
Moving into a share house is a great way to share the costs of rent with other people when you move out of home. In saying that, living with other people is very different to bunking with your parents. You’ll need to cover your share of the household bills, pay your portion of the rent on time, and buy your own groceries – not to mention be respectful of your housemates at all times. Putting a few agreements down on paper at the start can help mitigate any disagreements or misunderstandings down the track.
3. Make sense of super
Superannuation is basically a savings account for your retirement. How does it work? Your employer takes a small percentage of your wage or salary and pays it to your selected super fund on your behalf. But, you can also choose to make payments out of your own pocket. And, if you’re a low- or middle-income earner, you may qualify for the government co-contribution scheme, which means the government will match your personal contributions up to $500.
4. Start a savings plan
In addition to your super, it’s not a bad idea to put together a savings plan. Most financial institutions offer term deposits, which usually pay you a higher interest rate than your regular bank account. Generally, you can’t withdraw money from a term deposit until the end of the fixed term – a good thing if you’re not as disciplined as you could be when it comes to saving.
5. Be smart with financing
Financing basically means borrowing money for something you need – like a car. It includes most debt products, such as credit cards, personal loans, bank overdrafts, car loans, and rent-to-buy schemes. Be careful about taking on debt, especially when you are on a student wage. Live frugally so when you start your first full time job, you don’t have a mountain of debt to manage. Being independent is about more than simply packing your bags and moving out on your own. You’ll need to embrace your new financial responsibilities to really thrive.