Living on your own is an important and crucial step in your life.
Before we tackle the question of how much should you make to live on your own, it’s important to highlight that living on your own at the right time of your life is an important step with many advantages.
There are many benefits of living on your own in areas such as self-discovery, learning important life lessons and hacks and learning to be content with yourself.
Focusing on your interests and goals is another great benefit of living on your own.
The thought of living on your own for the first time can be overwhelming. However this is absolutely doable especially if the move is well calculated and planned for.
Contents
How Much Does it Take
You may be wondering, “How much should I make to live on my own?” The answer will vary based on your individual circumstances.
However, a general rule is to earn more than you need to pay your bills. It’s a good idea to save about 10 percent of your income each month.
As you start living on your own, you should also set aside a little money for entertainment. Saving about $20 per month can help you start off with enough money to have fun!
Budgeting for Living Expenses
Your monthly expenses will vary, so you’ll want to estimate how much you spend on each category.
For example, the amount you spend on rent will depend on your city’s average cost of living.
Two-story homes tend to be more expensive than one-bedroom apartments, and the amount you spend on groceries will depend on whether you eat out a lot or save money by using coupons.
Luckily, there are ways to estimate these costs, and here are some tips to help you start.
It’s important to understand your living expenses, as these are necessary to keep you safe and your home running smoothly.
Those expenses include your mortgage, groceries, water, and electricity. You may also want to include a few non-essentials in your budget, such as Netflix subscriptions and gym memberships.
These aren’t necessarily necessary, but they are necessary to maintain your health and keep your home in working order.
To help you better understand your monthly expenses, create a list of items you typically spend on. You may need to allocate more money for groceries, or reduce your transportation expenses.
It is best to review your budget each month to make sure it is accurate and meets your current financial needs.
Also, create an emergency fund that you can access whenever you need to. That way, you’ll be prepared to deal with unexpected expenses without having to worry about running out of money.
Your living expenses will likely vary greatly based on the location you choose, but you should include all of your bills, including tuition and fees.
You’ll also need to factor in your existing debts, including auto loans, student loans, and countless others.
Make sure you calculate these expenses in your new budget before moving out on your own. These expenses will determine how much you can afford to pay for rent, and whether you need to find an alternate way to live.
When budgeting for your living expenses, you must take into account your income and any other sources of income you may have.
These sources will help you set financial goals and attain greater success.
Once you have figured out your take-home pay, calculate your monthly living expenses and save a portion of it for your goals.
Remember to leave room in your budget for fun and recreation. If you can’t find affordable housing, consider living with a roommate. It’s better than struggling to make ends meet every month!
Limiting Housing Costs To Under 30 Percent Of Your Income
The idea that you should limit your housing costs to 30% of your income is commonly referred to as the 30% rule.
It is often the default assumption of affordability calculators and has been adopted by many mortgage lenders.
Private landlords also usually require that their renters make an annual salary that is three times higher than their monthly income.
The 30 percent rule is a personal finance gospel, but it can be challenging to live within.
It is crucial to note that housing costs can be quite expensive, and it is vital to consider the cost of transportation when calculating your monthly budget.
Although you can shave some of the transportation costs, you shouldn’t take on more than 30% of your income for housing costs.
A 30 percent limit for housing costs should also be used to factor in other costs, such as mortgage payments and property taxes. A few things to keep in mind:
Keeping housing costs to thirty percent of your income is a good rule to follow if you want to afford a new home.
The average cost of a new apartment or house can be as much as 30 percent of your income, so making sure your rent isn’t more than 30 percent of your income can help you avoid falling into the renter’s category.
Although it may seem like a reasonable goal, it is important to note that the standards set by the federal government are not necessarily universal.
The 30-percent rule for housing affordability is based on an amendment passed in 1969. This law was co-authored by Senator Edward Brooke, who was the first popularly elected African-American senator.
Brooke advocated for affordable housing and co-wrote the Fair Housing Act, which prohibits housing discrimination based on race.
It is important to remember that while the 30 percent rule is not universally applied, it is still a useful benchmark for evaluating your housing needs.
Saving 20% Of Take-Home Pay For Savings
As much as possible, you should set aside 20% of your take-home pay for savings.
This money can be used for long-term goals, including retirement or debt repayment.
If you have an income of $800 after taxes each month, you should set aside the additional money for long-term savings.
This money should be used for other purposes, too, like making extra payments on your debt and contributing to a retirement account.
Some experts suggest that you aim to save at least 20% of your take-home pay each month.
While this is a lofty target, even saving ten percent or fifteen percent of your take-home pay is an important first step.
Once you’ve achieved this goal, you can aim for more – saving 20% of your income is always a good start! Once you reach this target, you’ll be able to negotiate a higher salary.
If you’re not sure what percentage to save, consult with an expert. Some financial experts suggest that you set aside 20% of your take-home pay as a savings goal.
Others suggest saving thirty percent. One of the most popular rules is the 50/30/20 rule: allocate 50% of your take-home pay to expenses that are essential, thirty percent for the non-essentials, and twenty percent for savings and debt repayment.
But there’s no set formula that works for everyone. Saving your income should reflect your goals and lifestyle.
A budget that sets aside 20% of your take-home pay for savings is a great starting point.
This money can be used for retirement savings, emergency funds, down payments on your home, and other big-ticket items.
It’s a good idea to set aside at least 20 percent of your income for savings before paying off your debt.
But don’t worry if you’re spending more than 20 percent of your income on debt repayment or housing, because this will be your biggest priority.
Creating A Grocery Budget For Living On Your Own
When you’re living on your own, you have a variety of choices for how to spend your money.
The best budget for your circumstances depends on your spending habits and lifestyle, but it’s important to make the most of every dollar you spend.
If you’re trying to save money, write down specific goals for spending and saving.
If you set specific goals and stick to them, you’ll be less likely to deviate from your plan.
Once you’ve established a budget, determine which items are consumables and which are not.
Consumables include items you use regularly and need to replace on a weekly or monthly basis.
Examples of consumables include food, milk, shampoo, sodas, baby wipes, formula, zip-lock bags, basic kitchen utensils, cleaning supplies, and basic snacks.
Make sure you know exactly how much you spend on these items and stick to it.
The best way to set a grocery budget is to first know how much you spend on food.
Take stock of all of your regular purchases, from grocery stores to restaurants.
You may be surprised at how much you spend on food. By tallying these categories, you’ll be able to determine how much you can reduce your spending.
This can lead to drastic cuts in your grocery bills! But remember, it won’t happen overnight.
Final Thoughts
There you go. How much you really need to start living on your own depends on the lifestyle that you want to live.
The key basics are to start saving on time for moving out and ensuring that you earn more than the cost of all your bills put together.
To get onto a stronger balance with finances and life goals, seriously consider the 50/30/20 rule. All The best.