Everyone has their own unique situation when it comes to personal finances. There are countless variables that determine your circumstances. Whether or not you live alone is one of the top factors that will play a role in shaping your money profile.
People who live alone generally need to be more careful, as they are on their own in covering expenses. Here are some ideas for how to manage personal finances when you live alone.
Make a Budget
No matter who you are, it’s a good idea to make a budget. This is a particularly smart decision if you don’t have a partner or roommate there to keep you on track. Budgeting your money is the only way to always ensure that you’ll have enough in the bank to cover your costs. Here’s what you need to do in order to create an effective budget when living alone:
- Get all your financial statements together. You need to get all your bank account balances, any investments or retirement accounts, and all forms of income. You also need to figure out all your expenses. It’s important that you don’t skip anything on the expense front—including things like gifts, clothing, transportation, and pet costs.
- Separate your income and expenses to see how much of a cushion you have each month. If you’re cutting it really close—or even running in the red—it’s time to make some changes.
- Divide your expenses into essential and non-essential costs. Your non-essential costs are things like memberships, daily coffee runs, and gifts or presents. Figure out the places where you can trim down your spending in order to save more money.
Do What You Can to Build Savings
You don’t have as much of a safety net when you’re living alone. With roommates or a significant other, they might be able to help you out in a dire situation. You need to plan ahead in order to keep your personal finances afloat. Savings will give you something to fall back on should you run into any issues. These are a few ideas for building up money reserves:
- Keep your spending and savings accounts separate. If you put all your money in one place, you’ll be tempted to spend more of it. Sending some of your paycheck directly to a designated savings account—ideally at a different bank or credit union—will keep you from blowing whatever money you put away.
- Sell things you don’t need. Whether it’s collectibles, musical instruments, or extra furniture, you can generate money for your savings by getting rid of extras.
- Get a side job. This will help you boost your income, while also giving you less time to needlessly spend. You can even resolve to put all that extra money directly into savings.
Be Careful with Credit
A lot of people let their credit get out of control. This can lead to big problems, especially if you’re living alone, when you have higher expenses, and no safety net. Charging too much to credit cards can lead to you paying a lot more money down the line, since this form of debt comes with extremely high interest rates. Only paying the minimum balance on your credit will exacerbate this issue.
If you find yourself in the hole with your finances, it might be a good idea to seek external help through a debt negotiation or settlement company. Freedom Debt Relief is one of the most trusted players in this space. You can get a good feel for their successful track record by looking at Freedom Debt Relief reviews from sites like Highya.
Don’t Go Out to Eat Too Much
Dining out is something that might harm your budget if you aren’t careful. When you’re living alone, you often need to save every possible penny. It’s a good idea to learn how to cook, as making food at home will be much cheaper than going out. It’s important to note, however, that there are big differences between the things you buy at the store, too. Try to purchase groceries that are the best value, while still being nutritious.
Everyone needs to be responsible with their personal finances. But people who live alone need to be particularly frugal—as they tend to have less wiggle room than those who live communally. Keep these ideas in mind when you’re managing your money while living by yourself.