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Living on your own – the financial aspect

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Living on your own – the financial aspect

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I picked this topic because I wanted to be able to not only read on it, but also learn from it, since I am living on my own. When living on your own, finances play a very important roll. There's lots of factors to think about when making financial decisions on your own.
In the presentation, we have from personal finances, to life with finances, and plenty more.
I hope that this will be handy when making those financial decisions you need to make in the future of living on your own.

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To start this off, I think this picture is perfect to understand the financial part of living on your own.
All five symbols show the five most important things to think of financially when living on your own.
1. Food
2. Car
3. Health
4. House
5. Cloths

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As my first website, I wanted to include is this one because the first thing mentioned is the definition of personal finance. It's giving a basic idea on how personal finances is a big part of living alone. Since, it is all of your own expenses and investments.
Part of the definition says: "Personal finance is about meeting personal financial goals, whether it’s having enough for short-term financial needs, planning for retirement, or saving for your child’s college education. It all depends on your income, expenses, living requirements, and individual goals and desires—and coming up with a plan to fulfill those needs within your financial constraints."
I liked this part of the definition because it gives a basic idea on what to do/expect form living alone with your own finances.

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What Is Personal Finance, and Why Is It Important?

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Personal finance is about managing your budget and how best to put your money to work to realize your financial independence and goals.

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Budgeting. We all know what it is right?
Well when living on your own having a budget should be needed. This small video tells us a great was too budget. Yes, I know, we've learned this already, but it doesn't hurt to be reminded. Being able to properly budget is crucial, well at least for me. Being able to know what needs to be paid before getting what you want helps you know where your money should be going to first.

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The more you track your spending, the better you'll get at honing in on your monthly expenses. Making a budget is easy and can help set you on the path to financial security.

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This next website describes a few things we should be considering when going to live on our own. From everyday spending, taxes and emergency saving, this website give a small inside scoop on things to expect financially when living on our own.
This website also includes things many of us wouldn't think of so quickly. For example, when working on your financing, considering illnesses and incapacities is very important since we never know what life could bring us.

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By Kathryn Hauer, CFP, EA
Learn more about Kathryn on NerdWallet's Ask An Advisor.
At some point in your life, you may find yourself living alone. It could be in your apartment when you get your first job after college. It could be after a divorce in midlife or in old age after the death of a spouse. Regardless of your age or relationship status, living alone carries unique financial circumstances. Following are some important considerations for your solo financial life.

Daily expenses

One benefit of living with another person is that you may save on rent or a mortgage, utilities, cable, food and other costs of living. When you live alone, all those expenses are yours to pay in full every month. If money is tight, it's worth looking at ways to minimize those bills. Many websites and resources offer tips on how to save on your monthly bills and budget your spending so that you make sure you're living within your means.

Emergency savings

Financial experts recommend having three to six months of expenses in a savings account for emergencies. When you are your sole support, you may want to have six to eight months saved up. You never know when you might lose your job, have an accident, face a legal issue or run into some other kind of trouble. Keep in mind that if you do need to use your emergency fund money, you want to replace it as soon as possible.

Life insurance

If no one else depends on you for support, you probably don't need life insurance, which is primarily used to help those who will suffer financially if you die. It's worth taking a moment, however, to be forward-looking. Perhaps you have a parent, sibling or someone else in your life to whom you'd like to leave money. In that case, term life insurance is inexpensive for younger people and could provide a benefit for a loved one if you were to pass away while young. If you are older, you may find life insurance prohibitively expensive. But if you are still concerned about providing for a loved one, you might want to consider other estate planning strategies or the purchase of an annuity, which in some cases will pay a death benefit or continued payments to a beneficiary you designate.

Long-term care insurance

Long-term care insurance pays for your stay in a care facility after you aren't able to take care of yourself alone. It kicks in when your doctor certifies that you need help with more than two activities of daily living, which include basic things like eating, dressing and using the bathroom. Not everyone needs long-term care insurance. Wealthy individuals may be able to cover these costs on their own. People with lower net worth and few assets, and even some middle-class consumers, could find it difficult to pay the high premiums this insurance requires. Additionally, long-term care insurance premiums can go up substantially between renewal periods. Be sure to do your research before you buy.

Keep in mind that even though after age 65 you will have Medicare, government-sponsored health insurance for the elderly, it pays only for medical care. It doesn't pay for you to live in a nursing home or to have paid help for your daily activities of life. Once your assets have dwindled to certain levels, you will qualify for Medicaid, which covers custodial care in a nursing home.

A will

You might think you don't need a will if you have no spouse or dependents, but if you have family members, a will would be very helpful to them. The state in which you reside decides how to dispense the assets of those who die without a will. This is the probate process and can take a long time. It may also result in dispensations you would not have wanted. Creating and signing a will can help your next of kin immensely. You can hire a lawyer to make a will or do one yourself with forms you buy online. If you have no relatives or friends you wish to leave your assets to, you can leave them to a charity, college, organization or any other entity you choose. Contact the charity or organization to find out how to make this happen.

Illness or incapacity

What happens if you have an accident or become too ill to manage your finances and bills? You might want to create a notebook of passwords, bills you pay, credit card numbers and other pertinent information so someone can step in and take over if you are temporarily incapacitated. Just make sure it's kept in a safe place. You can offer a trusted person an extra key, and show him or her where you keep the notebook in case something happens to you. This may be sufficient for short-term illnesses. However, if you become permanently incapacitated, you'll want to have a legal document, known as a power of attorney, in place. This gives someone else the right to manage your finances on your behalf. You can work with an estate-planning attorney to set this up.

Taxes

If you're living alone, you probably file your taxes as "Single," which offers fewer tax breaks and results in higher taxes than "Married Filing Jointly." If you're young or middle-aged, the best way to lower your taxes is to contribute the most you can (up to the limit) to 401(k) or IRA retirement plans. If you're older, you want to be sure to check "yes" for the "over-65" higher standard deduction, which will help reduce your taxes.

Financial protection

It may be challenging to be on your own, especially if it follows years filled with family. It could also be pleasant to be able to keep your own schedule, eat what you want when you want, and spend your money on your wants rather than those of others. Knowing that you are protected financially will give you a sense of security that will enhance your general well-being.
Kathryn Hauer This article originally appeared on NerdWallet. This article also appears on Nasdaq. is a certified financial planner and fee-only investment advisor with Wilson David Investment Advisors in Aiken, South Carolina. She is the author of "Financial Advice for Blue Collar America."

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Key financial considerations for people who live alone

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By Kathryn Hauer, CFP, EA Learn more about Kathryn on NerdWallet's Ask An Advisor. At some point in your life, you may find yourself living alone. It could be in your apartment when you get your first job after college. It could be after a divorce in midlife or in old age after the death of a spouse.

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When living alone, being financially stable is very important to live a comfortable life style. Being able to manage our money is key. This website gives us great tips on how we should be managing our savings for those exact reasons.
The Don't Compete portion of the blog really stood out to me. Just because people around you have nicer things, or can afford better things, doesn't mean that you need to go out of your way to get something better. This kinda thing would be a want, so it's something you can save you money for. But, in all honesty, if you're living a comfortable life style with a secure finance plan, having to won up someone shouldn't be a priority.

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How To
Americans have a love affair with credit cards. According to the latest Federal Reserve figures , we collectively have $853 billion in credit card debt.

Our nation loves to shop, but sometimes that consumerism leads to debt and a poor financial situation.

If you need help managing money , here are 12 tips that'll help you learn how to live within your means.

Know your income and expenses

The first thing you need to know is what's coming in and what's going out.

Make a list of any and all income you have from your job, side work, pension, or anywhere else. Then make a list of every bill you have, from rent to your car payment. (Don't forget bills that may not arrive monthly, like car insurance.) Using a budgeting app can help you keep track of all your expenses and your income.

These are your fixed expenses - the ones you have limited control over.

The difference between your income and fixed expenses is what's left for the expenses you can control: your variable and discretionary expenses.

Most of us have sufficient income to cover our fixed expenses. After all, we wouldn't have taken on obligations we couldn't pay. It's the variable and discretionary expenses that so often get out of control.

Track your expenses

A spending plan or budget is the single best way to ensure you live within your means.

A spending plan is exactly what the name implies: It lays out what you plan to spend. To keep tabs on your progress or lack thereof, you'll need to track your money as you spend it.

This used to involve the laborious process of writing down everything you spent, dividing the expenditures into categories, adding them up, and comparing those totals with your plan.

These days online budgeting services make the process easy.

If you want to know how to live within your means and reach your goals , you have to track where your money's going. It's the only way to nip problems in the bud.

Separate wants and needs

When it comes to shopping, knowing the difference between a want and a need will help keep you out of debt.

Before you make a purchase, ask yourself if you really need it. If you don't, wait before you buy it. Try using the 48-hour rule.

If you see something you want to buy but don't think you absolutely need, wait 48 hours before buying it. You might find that, more often than not, you change your mind.

Don't compete

Don't fall victim to the keeping up with the Joneses mentality. Sure, your friends or neighbors might drive nicer cars, have the newest technology, or take expensive vacations, but that doesn't mean you have to do the same.

Think of it this way: Your neighbor might have taken a loan out for the Mercedes, put the new flat-screen on his credit card, or taken out a personal loan to pay for a vacation.

Sometimes living within your means might not be as glamorous, but you will be much better off for it long term.

Buy when you have the cash

It isn't always easy or immediately gratifying, but adopting an only-if-you-have-the-cash lifestyle can save you from falling into a debt trap.

For example, say that you're about to move out of your roommate's place and into your own apartment, and you don't have your own TV. At first, you might plan to pay for one with your credit card - until you do the math.

If you don't have the cash to pay off your card immediately, you might start racking up interest payments. Don't fall prey to credit card debt.

Instead, save up for a few months. If you have a laptop, try watching your shows on that instead. After a few months of saving, buy your TV in cash, or put it on your card and immediately pay it off that month.

If you can't afford to buy something now, don't reflexively pull out the plastic. Instead, save up be sure that you can afford it in cash - it's a huge part of being financially independent.

Keep an emergency fund

Life is unpredictable. Your car might break down, you could get sick, your bike could get stolen, and you might find yourself flying across the country to visit family.

Don't fall into debt because you haven't built up an emergency fund. If you do, be sure to use a loan payment calculator to pay it off as quickly as possible.

A good general principle to follow is keeping three to six months' worth of expenses saved up. That way, when something goes wrong, you won't have to reach for your credit card or take out a loan to pay for it.

Save money wherever possible

Saving money will help you stop overextending yourself financially. Try these tips to get started:

Never walk into the grocery store unprepared. Before you shop, be sure to pay attention to which items are on sale, or which items you can buy in bulk to save (but won't go bad). Also, be sure to use a shopping list - it's all too easy to accidentally buy frivolous stuff. Stick to your list and save.

Track your hobby spending. Decide exactly how much a month you want to spend on your hobbies, like concerts or skiing, and stick to that budget.

Bring lunch to work. If there are good restaurants near work, you'll be tempted to buy lunch every day. Skip the pricey meals and try bringing lunch from home. It'll add up.

Buy secondhand. You can find incredible deals at garage sales or thrift shops.

Open a high-yield savings account. There are plenty of banks that offer around 2% APY on savings accounts. Check these out and make sure you're making regular contributions once you open one.

Cut down on expenses

If you're still struggling to live within your means, take a hard look at your expenses. There is probably something you can cut out or at least cut down on. For example:

Go through your bills and cancel any service you don't use frequently. For the stuff you do use, call the provider and see if you can get a better deal, or at least cut it down. Maybe you only need 10 gigs of data a month rather than unlimited.

Boost your income

Of course, an easy way to improve your financial situation is to boost your income. The most gratifying way is to make more at your current job by getting a raise . It's probably the simplest way to ease money stress .

If that's not in the cards and you routinely find yourself struggling to make ends meet, it might be time to look for a better-paying job.

Of course, there are many other ways to increase your income, from selling your stuff to side jobs that turn a hobby into a business. Where there's a will, there's often a way.

Do it yourself

One easy way to save money is, instead of always hiring a professional to solve problems, learning to do it yourself, or DIY.

There are plenty of things with which you can learn to DIY. Perhaps there's a piece of vintage furniture that you want to refurbish. Maybe you'll learn to change your own oil, fix your own bike tires, or even cut your own hair. You'll find that you can save a huge amount of money by doing these things yourself because you won't have to pay for labor costs.

It's easier than ever to learn new skills. You'll find plenty of valuable resources online, from how-to videos to blogs, and forums. Spend some time researching whatever it is you want to do, and try to reach out to online experts if you need advice.

Don't deprive yourself

When you hear terms like "living within your means," especially when combined with words like "budget," it's natural to think about deprivation.

You might think there's no difference between "budget" and "diet." They're both about deprivation, right?

Wrong. A diet deprivation: Cottage cheese isn't anything close to ice cream.

Living within your means, on the other hand, doesn't have to be about deprivation.

Improving your spending habits at the grocery store doesn't negatively impact your life. Nor does having a drink at home with friends instead of paying $8 each at a bar.

In short, you can live within your means and still enjoy life.

The trick? Substituting imagination for money. Think about what you really enjoy - then find a way to get it for less.

Find contentment in your lifestyle

It's one thing to know how to live within your means, but you can also be happy with them.

Most people wish they had a more luxurious lifestyle: they wish they had more money, they wish for more expensive vacations, they wish they could buy more expensive things. This "desire for more" is exacerbated by social media, where everyone shares snippets of their supposedly glamorous lives.

First, it's important to remember that most people only use social media as a highlight reel. They only post about things that paint their lives out to be exciting, happy, and luxurious. But that's not the reality. If people posted on social media about all aspects of their lives, we'd have lots more "unhappy" posts about financial struggles, monotonous jobs, and feelings of inadequacy. Those are just some of the realities of life that fall on everyone from time to time.

The best thing you can do is learn how to unplug from social media. When you're not comparing your daily life to everyone else's highlight reel, you'll be able to recognize all the great things about your life that are easy to take for granted. Be grateful for the simple things, like having a shelter over your head or having food on the table, and recognize that you don't always need more material things to be happy. Sometimes, having a down-to-earth attitude can be the biggest budget improvement you can make!

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12 Tips to Help You Live Within Your Means

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Americans have a love affair with credit cards. According to the latest Federal Reserve figures, we collectively have $853 billion in credit card debt. Our nation loves to shop, but sometimes that consumerism leads to debt and a poor financial situation.... Full Story

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As a first year college student and my first year living on my own, this image shows some important things to consider for personal finances. Even if you know owning a house or retirement isn't near, thinking about it and starting to plan financially for it is not a bad idea.
When living on your own, knowing different investments you'll need to make before they come is important.

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Before being able to life on your own, you'll need to know how to be able to afford living alone.
This website gives 7 tips on how to do so. Something that should always be consider, and is mentioned in this website, is saving to live alone. You want to know, before hand, that u can financially be able to live alone.

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Sometimes being on your own can be scary. The more you think about it, however, the scarier scenario is never having that option. There's nothing antisocial or misanthropic about wanting to live alone. As much as it's a part of human nature to want to live in groups, it's just as natural to crave your private time. More importantly, there are phases in any life, and knowing how to afford living alone can help you learn more and become more productive on your own.

The one factor that keeps most people from living on their own is affordability. Monthly bills are unforgiving and a salary only goes so far. If you can't find a way to make those two things match, then living alone feels like an unattainable goal. Most people would be surprised to discover there are simple steps you can take to strike out on your own. You probably don't have to change your salary, but you will have to change some behavior and habits. Here are seven basic steps that will put you on the road to single living. Follow them and you'll be amazed to discover independence was closer than you thought when initially researching how to afford living alone.

1. Learn The Importance Of Money Management

Begin your journey towards single living by figuring out how to manage your money. Understanding why money management is important and how to control your finances is a crucial step towards living alone. Whether it's your income or your savings, you need to be levelheaded and clear-minded when thinking about finance. That may sound deceptively simple, but it's remarkable how many people are overly optimistic when it comes to managing money. There's a tendency to stretch beyond your means and a reasonable cost of living, because you anticipate money that has yet to arrive. Living in a credit-bound culture has taught most people to factor in next week's paycheck or next year's salary bump as if it were guaranteed, or in fact already here. Assume the money you have is all you'll ever have (amazingly, within each particular moment, that fact is true!). Deal with your finances as they are; not as you wish them to be. If you make your decisions starting from that premise, the rest of your plans begin to fall in line.

2. Create a Monthly Budget Plan to Afford Living Alone

Three major expenses increase drastically when you live on your own.

Rent - You obviously expect this cost to increase, but pay close attention to the disparities in rental prices as dictated by location and size. In some areas a single bedroom apartment costs more then a three bedroom house elsewhere. Make good decisions about where you move, with stable rents and mortgages in mind.

Utilities - Even though your home will consume less when you live alone, you'll be paying all the bills, so you'll probably still have to change habits (like cutting off air or heat when you're away from home) to see an actual decrease in costs.

Furnishings - If the people who lived with you owned any of the furniture, you'll have to replace it or learn to do without. Some apartments come furnished, but these don't often save you money, and there's usually a cleaning/damage deposit. Factor in that cost, as you make your plans to live singly.

To be ready for these expenses you should practice budgeting, and you should do so formally. Plan your monthly expenses by looking at your income soberly. See what you have to spend week to week, and what non-negotiable expenses have to be paid each month. Most people understand the undeniable importance of paying the rent, but do you feel the same about your car, your utilities and your food? Imagining yourself without either of those is unpleasant; not to mention unsustainable. The same goes for your phone. Try doing without a mobile in today's world, and you realize quickly how essential they are.

Use credible paid or free budgeting apps and devices to help you keep a manageable budget. There are plenty of free programs like the Google or Yahoo calendars and schedulers. These tools give you a format to leave notes and reference those notes to applicable dates. If you're feeling really daring you can try apps like Truebill or Mint. They actively find ways to help you lower your bills and expenses, but take a percentage of the money they help you to save.

Whatever method you use to get your bills in line, the money you save will put you a step closer to living on your own. Set a target amount for your monthly expenses that equals the monthly amount you must have in order to live alone. When you reach that target, you're that much nearer to your goal of independence.

3. Pay Off Debt to Help Afford Living Alone

If you're going to take that step of increased responsibility you absolutely must bring down your debt.

When you're on your own your credit rating is one of your major assets. It affects your rent, your utility bills and every credit purchase you have to make. If you pay off debt, you improve your credit score and can live on your own more successfully. Begin with smaller debts. Use money you set aside for 'luxury items' to rid yourself of outstanding balances. Do you currently pay for more than one streaming service? Take that monthly cost and apply it to a bill. Buy bargain food instead of name brands for a few weeks. These may seem like nickel and dime choices, but if they get rid of nickel and dime debts, so much the better.

For your major debts look into debt settlement or debt consolidation to pay off your primary creditors. These two methods are defined below

1. Debt Settlement - This repayment method involves paying a creditor a lump sum that is less than the full amount you owe. The creditor accepts the amount in lieu of the total and considers the full debt to be paid.

2. Debt Consolidation - Debt consolidation involves rolling several debts into a single larger payment. This may not cut down the total debt in the long run, but it does reduce your number of creditors and usually lowers your monthly payment substantially.

Perhaps you brought a car, and didn't plan properly, resulting in a loan default. Large credit card bills may be out of hand and piling up. Look into the methods above and you may be able to make your debt more manageable.

4. Increase Savings to Afford Living Alone

This is another important step to being ready to live on your own. Most financial consultants believe savings are the greatest indicator of financial stability. You should have more than a week or a month's worth of 'rainy day' funds. Some financial planners, such as financier Suze Orman, believe you should have an emergency savings that allows you to live for six months without additional income. Almost every planner suggests you follow something along the lines of the 50/30/20 rule. This rule breaks down as follows:

50% of your income goes to things you require, i.e. the things you simply must have (rent, food, etc.).

30% of your income goes to things you merely want (entertainment, vacation, etc.).

20% of your income goes to savings and debt.

Following this system may seem difficult, especially if you're barely managing on the income you have. Don't treat the percentages as targets you must hit immediately. Set these rates as financial goals and work your way towards them. Obviously you can build your savings if twenty percent of your monthly income contributes to it. It's best to make savings deposits as automatic as your bills. Have a set amount come from your income and let it be directly deposited into an emergency fund or savings account without exception.

5. Earn More, Spend Less

Increasing income is possibly the hardest goal to reach on your road to independence, but it is one that is completely under your control. It's difficult, if not impossible, to convince the average employer to increase your salary. It is possible, however, to take on more work at your own discretion to earn more money. Even if your main job doesn't have overtime work, you can create a side hustle that can augment your income. If you have a particular skill, chances are there's a venue willing to pay you for it. Freelance sites like Fiverr and Upwork allow freelancers to create profiles and bid for work. Job sites like Indeed and Zip Recruiter post jobs that are permanent, part-time or temporary. You can create a free website on platforms such as Wix or WordPress. Support platforms like Patreon or Youtube will help you monetize posted videos with a following. Any of these sources may provide you with extra net income and bring you closer to your dream of moving on your own.

6. Look For Deals When You Move

You must remain money conscious when you plan your actual move. Look for bargains. Many rental properties have move-in specials and discounts. Some of them may forgive the first month's rent. Sometimes they reduce the price for the first three to six months. Moving companies may have special deals as well. Look for rates that drop if you schedule your move for non-peak hours. In terms of furniture, go to bargain shops and flea markets. Look for special deals online and search private listings for bargains. All these savings add to your total, and will help you afford living alone. The less you spend, the more you keep, and the better you will live your single life.

7. Live Frugally But Well

We've been talking a lot about making sacrifices, but don't forget to live along the way. You don't need to splurge or break your good habits, but creating a happy lifestyle is a part of living on your own. What good is independence if you're miserable? You'll still buy things and entertain yourself occasionally, and you may as well do so properly. When you spend your money on pleasure, always try to get the best. Go to the finer theaters or take a day trip to a beautiful retreat. You can do a lot of wonderful things inexpensively. Buy a great office chair or the computer monitor you always wanted. However you treat yourself, it's a reminder that you remember how to live well and can trust yourself to live alone properly.

FAQ's About How to Afford Living Alone

Lets look at some frequently asked questions about being able to live on your own. We've answered a few of them along the way, but its good to go over a single list, so the answers on solo living are all in one place.

What salary do you need to live alone?

The costs vary, but your salary should dictate your living choices. Don't live beyond your means, and you'll find practically any living wage allows you to live on your own.

What is the cheapest way to live alone?

The cheapest way to live alone is with as few expenses as possible. Don't pay for the largest cable package when you move out. Have a reasonable mobile plan. Try to move somewhere near your job, to cut down on your commute.

How do people afford living without roommates?

Get into the habit of handling and paying for everything yourself before you actually move on your own. You won't miss other people in your house, if you're accustomed to doing everything yourself.

How can I make enough money to live by myself?

You may already be making enough to live alone. Find a way to live completely within your means and your income will, by definition, be enough to take care of you.

How do I live alone with no money?

You can't live anywhere with NO money. If you're on your own, you dictate what is acceptable or not. Let your lifestyle grow according to your own capability. You don't need to impress or be judged by anybody but yourself.

How do I afford an apartment by myself?

Establish credit and save money, then move on a timetable that works for you.

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How to Afford Living Alone: Top 7 Tips - TurboFinance

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Sometimes being on your own can be scary. The more you think about it, however, the scarier scenario is never having that option. There's nothing antisocial or misanthropic about wanting to live alone. As much as it's a part of human nature to want to live in groups, it's just as natural to crave your private time.

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1. What did you learn about your topic that surprised you the most?
The thing that surprised me the most about my topic is that there is so many different aspects of financing that go hand in hand with living alone. All of these aspects I know I'll need to start doing, since I am living on my own already.

2. Provide a real-life example of how this topic is relevant or interesting for you.
Something that I know is already happening is that I know I struggle with my wants and needs. It is something that I definitely need to work on, especially, knowing that I have so little income coming in.

3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
I think the most important this to pass on is how to properly budget, or just budgeting in general. It's very important and everyone should know how to properly budget finances.