Money Moves to Make to Get Out of Your Parents’ House After Covid-19
The taste of freedom after moving out of your parents’ house can turn sour if you have to return home during the coronavirus pandemic.
College graduates and students, and young people new to the workforce or with established careers who have been laid off, are moving back in with their parents in record numbers because of the coronavirus.
A survey found that 86% of college students have been displaced, returned home, and have shifted to online learning during the pandemic.
With no place safe to go, a bedroom that you last slept in during high school may be the best solution to a difficult problem.
Your parents may want to set some rules for living at home again, but there’s no denying that the move will save you money in many ways. So maybe having a midnight curfew is worth it.
But maybe not after months and months of living with mom and dad again.
Having a plan so that you don’t have to do this again, such as in a future job loss, can be implemented during this time. Here are some money moves to make now so you can afford to leave your parents’ home after the pandemic ends:
Looking for a new job may be at the top of your mind, but your first priority should be getting your finances in order so that you can withstand a loss in the future.
Setting up a budget is a good first step.
Your expenses will likely change when you return home, and so should how you budget for them. This will give you a better view of any money you have left so you can save it. Remember that word: save. That’s a top goal of living at home again because it’s probably the biggest chance you’ll ever get to save a substantial amount of money.
If you’re not paying rent to your parents, but are maybe paying a few household bills to at least contribute something to the household, then you’re still saving a lot of money on rent. We’ll soon get into what to do with that saved money, but the first step is to set up a budget with expenses and income.
If your income is down significantly, then you won’t see as much in savings in your pocket, but at least you’re not going into debt. Or hopefully you’re not going into debt.
Budgeting reminds you of your expenses, so you may see ways to cut back on some. Groceries, for example, may be a lot less of your budget now.
Now that you know what your new living expenses are, you can see how much savings you’ll have each month. It can add up to enough to have a heft emergency fund when you eventually move out again.
A good goal is to save for three to six months of essential expenses. Food, utilities, auto insurance and other bills, including rent, are expenses you should save for when a rainy day happens again.
The biggest one to save for is rent, though any loans or other debt may be close behind. Becoming a renter again can mean coming up with a security deposit and first and last months’ rent. Save for those too.
Look for a high-yield savings account to store your savings. Make it a bank different from the one you normally do your banking with so that it’s a little difficult to get immediate access to.
Pay Off Debt
After starting an emergency fund, a smart second step is to pay off as much debt as you can with the money you’re saving on living expenses while living at home.
Federal student loans don’t have to be repaid through the end of 2020, but after that it’s uncertain if the federal government will extend the relief.
Credit card debt is usually the most expensive debt to carry, so paying it down will save you a lot of money in interest. Even while interest rates on most loans are low, on credit cards they’re still typically high, so paying them down can put more money in your pocket over the long-term.
Paying off debt and paying your bills on time should improve your credit score. That can help you get approved for loans easier, and can help you rent an apartment if a landlord runs a credit check on you and uses your credit score in their decision to rent to you.
Work on Finding a Job
Finding a job isn’t necessarily a financial move that will put money in your pocket or help you move immediately, but it will help your long-term finances and will help you move out of your parents’ house eventually.
Some productive ways to fill your extra time include:
- Work on your resume
- Seek a mentor or career coach
- Search for a job
- Learn new skills
- Expand your network
Many businesses have moved to remote work, so don’t expect hiring during a pandemic to end your chances of finding a job.
Returning home to live with your parents doesn’t have to be a loss of the freedoms you found when you first moved out. Use it as a time to connect with your parents and to save and develop other good financial habits so that if another economic slowdown hits, you’ll have the skills and money to deal with it.
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