Keeping your finances in order as a young single person can be difficult. You are young, wild and free! It is important to build strong habits early. This doesn’t mean you have to subsist on ramen for the rest of your life, but you do need a budget. Starting to think about your future now means you can rest easy as you get older. Here are some tips to gain financial security.
Create a Budget
Start by tracking your spending for a month. Write out a budget. Account for every dollar you make. You can do this by allocating certain percentages to different categories or take the time to divide each paycheck up using specific pre-determined amounts. As a single person, your budget might look drastically different from that of a family. You don’t need to save up for college for your kids and other family-related expenses won’t be present in your budget. You might have a larger entertainment budget because you spend more time out with friends.
Learn to Cook
Knowing how to cook some simple meals will save you a lot of money. This doesn’t mean you never go out to eat, but it does allow you to save your money for fun times with friends. Stop wasting all your hard-earned cash on McDonald’s. Cutting out little unnecessary expenses means you have more money to play with.
Consider investing in a coffee maker. Making coffee at home is easy. Trips to Starbucks can really add up. Choose one or two days a week that your splurge, but otherwise brew your coffee at home. You can even get a machine that has a timer. You add the grounds and water the night before and wake up to the nice aroma of freshly brewed java.
Don’t Buy a Home
Renting often gets a bad rap. In reality, it gives you flexibility. As a young, single person, you might not be ready to settle down. A down payment, repairs, Homeowner Association and other home-related expenses add up fast. A couple can share some of these expenses, but as a single person, you bear the brunt of all costs. Regardless of whether you decide to rent or buy, your housing expenses should never exceed 25 percent of your budget.
Get Out of Debt
Being in debt is stressful. Make a plan to get out of debt. This takes confronting it. Ignoring the problem doesn’t make it go away. Tally up all your debts. Determine your debt to income ratio by dividing your total non-mortgage debt by your annual income. Change your habits. If you are an impulse buyer, destroy your credit cards and stick to your budget. Don’t take out more student loans until you have paid off your current ones. Create an emergency fund. Then, start paying as much as you can towards your debt. Make it a priority.
Even single people need insurance. Most people have the obvious insurance: car insurance, health insurance and homeowner’s or renter’s insurance. You should also consider Columbia life insurance. Just because no one is relying on your income doesn’t mean you don’t need life insurance. It can help cover funeral costs or for care for your elderly parents. It can also be used to cover your debts. Relatives could be saddled with these bills otherwise.
Just because you are single doesn’t mean you can’t be financially responsible. Create a budget today. Start by paying attention to your current spending habits. Work on trimming unnecessary expenses. Learn to cook and purchase a coffee machine. Don’t get roped into buying a house before you are ready. Stop avoiding your debt. Crunch the numbers and start tackling it. Invest in insurance. Life insurance premiums are based on age, so if you are young, it won’t cost you much. Be proud of your responsibility. Watch as your savings accounts grow. It is rewarding to know where your money goes.