Living Alone for the First Time? How to Establish Financial Independence

Are you a young adult who is about to live on your own for the first time? Financial independence is a huge responsibility, and it can be overwhelming, exciting, and daunting to think about all the expenses that you have to manage. While managing your finances can be tricky to learn at first, your inexperience doesn’t have to prevent you from growing in your financial well-being. There will be challenges to learn the ins-and-outs of managing your money, but you are already making a great first step by reading resources like this one and being curious about how to be proactive in your financial journey. In this blog, we’ll give you an overview of what essential things you need to know to excel when living on your own.

What Are the Essential Expenses for Someone Living Solo?

After you move out of the home of your parent or guardian, you may have a general idea of what expenses you’ll need to handle, such as rent, gas, and groceries – but the reality is there is so much more to it than that. While these are just a few of the essential expenses that you will be paying month, there is a wide range of things you’ll want to include in your budget.

Rent

Considering it’s your first time living on your own, it’s unlikely that you will be owning your own home and paying for a mortgage for the first few years of financial independence. Instead, you’re likely paying rent for an apartment or townhouse. It’s important that you have the funds you need to pay rent each month. If you’re not sure whether you can afford a rent payment, consider spending no more than 30% of your gross income on rent.

Along with your monthly rent payment, there are other first apartment expenses you’ll also need to include in your budget. Keep in mind that each apartment complex is different, so you’ll want to pay attention if there are any specific expenses that are unique to that property.

• Renter’s Insurance. The national average for renter’s insurance is $148 per year, which averages to $12 per month. This rate can vary depending on your state.
• If your apartment complex has special features like a pool or fitness center, you might have a fee for them including with your base rent.
• Will you have a cat or dog that will be living with you? Renters are often required to pay a deposit and a monthly fee for their pets to be allowed to live on property.

Utilities

Utilities are essential for your living situation, and it includes a wide variety of serves, such as your electricity, water, waste water, gas, and trash. Depending on the size of your apartment and where you live, your average utilities payment each month can range from $150-$200.

Furnishing Your Home

While it’s not necessary to buy everything brand-new, it’s important that you have everything that you need for your new home. Anything from furniture for your living to dinnerware for your kitchen is crucial for your everyday routine. Whether you’re inheriting these items from a relative, receiving gifts from a wedding registry, or you have to buy it all yourself, furnishing your home is still pricy and you’ll want to have some money set aside for when a need arises.

Car Maintenance & Gas

You might have owned a car for several years at this point, but you might have had a parent or grandparent pay for your car payment or helped cover your car insurance. Now that your on your own, it’s time to take these expenses into your own hands. Here are some expenses to plan for in your budget.

• Consider how much you spend per month on gas. Account for how many miles you drive to and from work and if you travel often.
• Maintenance & Repairs. In 2024, Americans spent an average of over $6,000 on repairs for their cars.
• Car Payment. If you have a car payment, be sure you’re paying it off every month on time and in full.
• Car Insurance. Car insurance is an essential expense for your vehicle, especially if you ever got into an accident or have storm damage. Insurance rates can vary depending on the make, model, and year of your car and what kind of coverage you’d like to have. In Tennessee, the average cost for full coverage is $2,016 per year.

Groceries & Eating Out

Even if you shop at cheaper grocery stores like Aldi or Walmart, it’s important that you budget well for your food each month. It can be easy to stack up your grocery cart full without paying attention to the costs. Your grocery budget will vary depending on if you are single, married, or have children.

Internet, Steaming, & Phone Bills

Living on your own means you will need to handle your internet and phone bills. These expenses can vary depending on the company you’re using, but the average cost for just a phone bill alone is $144. You’ll want to consider how much data you want included in your plan, as well as how many phones you need to cover. Internet can cost around $65 per month.

Another price is streaming. Streaming services like Netflix can be $17.99 per month, not to mention any other streaming platforms you use like Disney+ or Hulu.

Health & Fitness

It’s always important to prioritize your health when building your budget. Health insurance plays a key role in taking care of you by covering major health expenses that could interrupt your financial well-being if it’s unexpected or a major surgery. Set some money aside in your budget to have for covering copays or other necessary health items for personal hygiene.

Grow Your Savings

One important part of your budget is to pay yourself first! Growing your savings and building your financial stability is crucial for building your financial foundation as an adult. While paying your bills on time is a great first step to financial stability, it’s just as important that you prioritize saving. A high-yield savings account or another interest-earning savings account is a great place to put your money in, so it can work for you over time as you put your money into the account.

How Do You Save Money on Groceries and Household Items When Living Alone?

After looking at the long list of expenses that come with financial independence, you might be concerned about how you can afford it all and still have the money to do the things you love for fun. Don’t worry – there are plenty of ways you can be savvy with your money, it’s just a matter of how you can set your priorities for what is important to you and what’s not.

Tip #1: Stick With One Streaming Service

Streaming services can get pricy fast, especially since we often have more than one. To save money, try choosing only one streaming service to watch and cancel your other subscriptions for the time being. Another great way to save is to invest is to set up a Blu-Ray player in your apartment. That way you can watch anything you want at any time, without the hassle of not knowing where your favorite movies will be streaming or having to watch commercials.

Tip #2: Make a Grocery List & Meal Plan

This sounds simple, but it can be a game-changer for saving money! Creating a grocery list gives you a general idea of what you need to buy and how much it will cost. Going in without a plan is an easy way to get carried away with spending too much on things you don’t need. Another helpful tip is to plan your meals a week in advance, so you know what meals you need to prepare before you go to work or have a busy weekend. The more you are prepared, the less rushed and scattered you’ll feel when it’s time to eat.

Tip #3: Keep a Temperate Climate

Keeping an eye on your thermostat and your fireplace is a great way to keep your expenses down. If you have a fireplace, it can be easy to keep it on during the cold winter months, but this mind make your utility bill skyrocket if you’re not careful. The same goes with air conditioning – be sure you’re not keeping it too cold or too hot all the time. Having it stay at a moderate temperature when you’re not there, or leave it on auto instead of cool or heat.

Tip #4: Shop at Discount Stores

If you’re needing to buy a brand-new outfit for your job or wanting to host your friends for a meal, shopping at discount stores compared to name brands can help you get the things you need while being mindful of your wallet. Stores like TJMaxx, Home Goods, Aldi, and Sam’s Club are all great options if you are looking for some cheaper options for clothes, groceries, or household items. TJMaxx offers marked down items for a variety of brands, some of which are name brands like Tommy Hilfiger or Adias.

What Mistakes Should First-Time Renters Avoid?

Having a mayor payment each month like rent can be daunting at first when you’re living on your own. It’s important to know what you should and shouldn’t do as a first time renter, so here are some things to remember to make the experience less stressful.

1. Don’t Be Late on Your Payments

Always be sure to pay your rent on time and in full every month. Late payments can result in fees and can negatively impact your credit score.

2. Be a Good Neighbor

Be respectful of your neighbors by following any quiet times, clean up your trash, and keep your outdoor area tidy. Being a good neighbor not only helps you build a good relationship with your neighbors, but also your landlord as well.

3. Don’t Opt-Out of Insurance

Renter’s insurance is essential for your apartment. If there is a fire, flood, or tornado, your home will be covered. Not having insurance means you are risking losing everything without the ability of replacing what you have financially.

4. Go on a Walk Through or Inspection

Before you move into your apartment, go on a walk through to see any signs of damage, repairs, or mold. It’s essential to know if it’s livable and safe before signing the lease.

Learn How To Be Financially Independent with Leaders Credit Union

Are you ready to be financially responsible for all your expenses? While you are now in charge of your financial situation, you don’t have to manage it all without help. Our Financial Champions are happy to answer any questions you have about how to manage your finances, build a budget, or improve your credit score. Another helpful resource is our Smart Budgeting Tool Kit, where you can learn how to lay down the foundation of your financial well-being.

Leaders is federally insured by the NCUA.