During the final weeks of AP Government, Mr. Giusto gave our class the most practical financial literacy assignment of our young lives. He told us that our parents had just kicked us out, and we only had $2,500. We needed to find a place to live and find a job to support ourselves for the first month. He threw wild cards at us like our car being towed or getting laid off. And suddenly, that $2,500 that seemed like a lot of money disappeared.
Now, that I’ve graduated college, and I’m ready to embark on my journey of adulthood, I’ve been thinking more and more about this assignment. And although Mr. Giusto did his absolute best, there was no way he could have prepared us for the harsh realities of the American economy.
Rent prices are astronomical, the cost of living increases everyday, and saving is a challenge especially if you’re living pay check to paycheck. With this information dangling over my head, I decided to budget and create a plan for how I would live within my first year of adulthood. And I wanted to share some of the things I considered while creating this plan.
- Do your research when it comes to finding a place to live. It may seem like it’s easy to just pick up and move anywhere in the country, but it takes a lot more planning. According to the Department of Numbers, in 2015 the average monthly residential rent was $959. When you first move into a new place, landlords typically expect you to pay a deposit and first month’s rent. If your rent costs you $900, that’s already $1,800 before you’ve even settled into your new digs. You may want to consider finding housemates, sharing a room, or living further away from your place of work or school to lower the costs. (Side note: Only spend a third of your monthly income on rent).
- Get Renter’s Insurance. Anything can happen within a year, and you want to make sure you covered. Say someone breaks into your apartment and stills your laptop, TV, and microwave. Do you want to be S.O.L or stress free? There are renter’s insurance plans as low as $10 a month that will cover you up to $10,000 depending on your place of residence and number of occupants.
- Don’t spend a ton of money on furniture, but make sure you have the essentials. When my big brother first moved out of the house, the only pieces of furniture he had were a desk for his computer, a mattress without the boxspring and headboard, and a trash can he made out of tin foil and cardboard. I’m not saying you have to live this way, but try approaching your living space with a minimalist mindset.
- Spend money on a good mattress. There are many people who would tell you to just sleep on any old thing, but I think a good mattress is an essential part of living. You approximately sleep for 1/3 of your life so you’re going to spend a lot of time on it. Also, we perform better when we’ve had enough quality sleep. You’re going to need a lot of energy to keep you pushing through your next year.
- Start establishing credit. You should’ve done this yesterday, but it’s never too late. I’ve always hated the idea of credit. If you don’t have money for something, just don’t buy it. However, you need credit for everything. Some places will check your credit score before renting a place to you, and you can’t get a good interest rate on a car unless you have a good score. Get a credit card with a low APR, use it once or twice a month, and then pay it off. I have a couple of credit cards. One, I keep for absolute extreme circumstances… like dying on the side of the road. And one for for monthly expenses that I pay as soon as I spend. I’ve been doing this since I was 18 (I’m 21 now), and I have an excellent credit score.
- Learn to cook different things. I fancy myself to be a good chef. However, I have only a few recipes that I constantly recycle through, and it gets boring. It gets so boring that I decide to waste money and eat out when I could’ve just whipped up something in my kitchen. Anyone can cook. It’s not difficult, but it does require some time, patience, and willingness to learn. If you perfect your cooking skills, it feels like eating out everyday, and you’ll feel good knowing exactly what goes into your food.
- Remember that you’re never too good for a side hustle. Even Beyonce has side hustles. That’s how the rich stay rich. I worked three jobs this summer, and if it wasn’t for the third job, I would never be able to save anything. Don’t be afraid to take on a waitressing job or nannying for kids. There are even jobs online where you never have to leave the comfort of your home like virtual assistants or copywriters.
- Learn to make whatever it is that you love spending money on everyday. For some, people this is a Starbucks latte. For me, it’s an Acai Banana Berry Smoothie. Yeah, I know it sounds expensive. I spend about $7 every day at work. That’s about $35 a week. I can make a smoothie from home and only spend $30 a month.
- Set up a “keep the change” savings account. I am a customer with Bank of America so I’m not sure which other banks have this specific program, but a lot of banks do something similar. Every time I use my debit card, it gets rounded up to the next dollar, and that change automatically goes into my bank account. It’s the equivalent of saving all your coins in that old slurpee cup, except more efficient. I saved $100 in just a couple of months.
- And lastly, if you want to go out to a bar or club with your friends, just pregame at home. Thirteen bucks for a long Island Ice tea is ridiculous!