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You see, the financial problems of consumers are not really because of lack of finances. Even if you are earning a low income, you do not have to give up doing what you want. For instance, if you want to live on your own, you do not have to give that up. You do not have to let your income keep you from living alone. If you are tired of having roommates, then you do not have to suffer just because you feel like you cannot afford it. You can very well afford to rent your own house as long as you know how to implement certain budgeting tips.
Of course, the ideal scenario is to own your house. However, current financial situations make that impossible. This is especially true for the young adults who are burdened with student loans. This debt is the reason why some people are currently renting and have passed up homeownership. According to TheGuardian.com, this is driving the increase in the number of houses for rent. Every year since 2004, there was an average increase of 770,000 rental houses. In 2014, the increase was up by 35.5%. Despite that increase, the rental vacancy rate is currently low.
We all know what happens when the demand is high and the supply is low – the price of rent increases. Given this data, do you really think that budgeting tips can still help you afford living on your own?
How different will budgeting be when you live on your own?
It is very much possible to be happy despite having a low income household. In fact, you need to learn how to be happy regardless of how much you are earning.
The key to that is a simple formula of building your lifestyle around your net income after savings. This means you have to take your net income, remove a portion for your monthly savings. Anything that is left after that is your budget. You need to build you life around this amount and do not go beyond it.
Once you learn to live by these rules, you will understand how you can afford to live alone, without roommates, regardless of how much you are earning.
There is an article published on USNews.com that discusses the cost of living alone. It explains four important considerations when you are planning to live without any roommates. Let us go through them one by one to understand the budgeting tips you need to learn.
- You will pay more on rent. This is actually quite obvious. Since you are living alone, you will be solely responsible for paying off your rent. Of course, you will be living in a smaller home – which is cheaper than the bigger one that you rented when you lived with someone else. But although that bigger home was more expensive, you had someone to share the cost with. That is no longer the case. The article cited an example with the apartment rates in Chicago. A 1-bedroom apartment that costs $1,607 is still more expensive compared to a 2-bedroom apartment that makes you pay $902 (remember you are paying only half). The rates will depend on the city you will live in but it is generally the same – you pay more when you live alone.
- You will pay more on utilities. The same concept applies here with rent. Obviously, since you are the only one consuming at home, you are also alone in shouldering the costs of your bills. Your water and electric bills will be solely your responsibility. If you want to get cable or Internet subscriptions, you are on your own in paying for that. Of course, your electric and water consumption will be lower and that means your bill will be smaller.
- You need to buy your own furnishing. Renting a furnished house is usually more expensive and that means you need to buy your own stuff when you live on your own. From the bed to the dining table to the sofa – all of these will have to be bought. If you want decorations and other stuff, these will go to your tab as well. The article also mentioned even your cleaning supplies and other kitchen and bathroom necessities will be all on you.
- You can control your bills. The last consideration that was discussed in the article involves choosing the bills that you will pay for. According to the article, this is one of the few financial benefits to living on your own. You can control what you will subscribe to based on your budget and your own personal preference. If you want to save money, you can choose to lower your use of heat by simply wrapping yourself with a blanket – and you do not need to discuss it with anyone else.
Obviously, living on your own is more expensive. But that does not mean there are no budgeting tips that you can follow in order to afford living without any roommates. Just make sure that you save up for this change in advance before you make your move. That way, your finances will not take a huge blow. Remember, you need to save up for the security deposit and the rental advance that landlords usually ask for. And you need to spend on the move itself – plus the other stuff that you need to buy in order to make the new place a home.
Tips to make living alone fit your budget
According to an article published on CityLab.com, you need to earn at least $15.50 an hour in order to afford renting a one-bedroom apartment. That is almost double the amount that minimum wage workers are earning. That means if you only earn the minimum wage, it would be very difficult for you to rent on your own.
But of course, that does not mean it is impossible. There are a lot of things that you can do to make living cheap. Here are budgeting tips that will help you afford living without roommates.
- Know how much you can afford. Take a good look at your net income and your expenses. You need to consider how much change in expenses you can afford. It will help you plan your next move. Ideally, your rent should be no more than 25% or 30% of your net income. Make a budget plan and stick to it. If your expenses end up being more than your income, you may have to make the difficult decision of giving up certain expenses.
- Build up your emergency fund. Take note that this is not the amount that you will spend when you move or when you buy your furniture. This is your savings for any unexpected emergencies that you will encounter. After your move, your finances will be a bit tight. Having this emergency fund will be very useful in case your car needs a new transmission or you need to buy medication for an illness, etc.
- Choose where you will live. Some cities are cheaper than others so select the city that you will live in. If you have to live in an expensive city on your own, then rent a small space for yourself. There are a lot of beautiful studio units that you can decorate well to make it spacious and comfortable. Be reasonable when choosing the neighborhood too.
- Buy 2nd hand furniture. In case you have to buy a lot of stuff for your new home, you may want to consider buying 2nd hand furniture instead. Go around the neighborhood and see if there are yard sales that you can buy items from. You can also go to Craigslist or a similar site where you can buy items really cheap. Also, you need to plan what you will buy first. If you can forego buying a dining set because you can eat on the floor or on your lap for the meantime, then make that sacrifice. That way, you do not have to use credit when making purchases. You can also ask family and friends if they can give you any old furniture or household item for free – at least, if it is something that they do not need anymore.
- Plan your household budget carefully. You need to think carefully about how you will spend on your new lifestyle. The usual tip is to cook your own food but sometimes, when you are all alone, eating take out is more economical. Instead of getting both cable and Internet, you may want to just get an Internet subscription and watch your favorite shows from there. For your other household needs, compute if it will come out cheaper if you make your own cleaning materials like detergent, etc.
These budgeting tips will really help you afford living without a roommate regardless of your income. Think carefully before making this momentous step. There is freedom in living on your own but there are a lot of financial responsibilities too.