Canada Markets closed
  • S&P/TSX

    20,633.27
    -128.76 (-0.62%)
     
  • S&P 500

    4,538.43
    -38.67 (-0.84%)
     
  • DOW

    34,580.08
    -59.71 (-0.17%)
     
  • CAD/USD

    0.7786
    -0.0022 (-0.2826%)
     
  • CRUDE OIL

    66.22
    -0.28 (-0.42%)
     
  • BTC-CAD

    63,823.86
    +2,560.05 (+4.18%)
     
  • CMC Crypto 200

    1,367.14
    -74.62 (-5.18%)
     
  • GOLD FUTURES

    1,782.10
    +21.40 (+1.22%)
     
  • RUSSELL 2000

    2,159.31
    -47.02 (-2.13%)
     
  • 10-Yr Bond

    1.3430
    -0.1050 (-7.25%)
     
  • NASDAQ

    15,085.47
    -295.85 (-1.92%)
     
  • VOLATILITY

    30.67
    +2.72 (+9.73%)
     
  • FTSE

    7,122.32
    -6.89 (-0.10%)
     
  • NIKKEI 225

    28,029.57
    +276.20 (+1.00%)
     
  • CAD/EUR

    0.6878
    -0.0027 (-0.39%)
     

How To Survive Financially When Your Parents Cut You Off

damircudic / iStock.com
damircudic / iStock.com

Leaving home for the first time, whether you're going off to college, or taking a year to experience life, is a big milestone for many young adults. While excitement and freedom may reign on one hand, reality will soon catch up, as many people's parents decide that their fledgling needs to finance their own life now.

Important: 7 Moves Gen Z Should Be Making To Protect Themselves Financially
Know: 5 Financial Steps Gen Z Should Be Taking Now

The moment you are cut off from your parents' financial largesse can be alarming, but it doesn't have to be if you are prepared. Here, experts offer tips and advice for how to navigate this important step in independence while staying financially afloat.

Last updated: Sept. 13, 2021

RgStudio / Getty Images
RgStudio / Getty Images

Make a Budget

The first place to start when you’re first on your own financially is to make a budget. According to Neiko Johnson, co-founder and editor of the blog Secret to Finance, try to apportion your expenses by this ratio: 30% for necessities (such as gas); 20% for housing; 10% for medical care; 10% for utilities and phone bill; 5% for entertainment and 25% for savings/emergency fund. Whatever you do decide, make sure you've got enough to cover all your necessities first.

Check Out: A Look at Gen Z’s Financial Habits, From Spending to Saving and More

mihailomilovanovic / iStock.com
mihailomilovanovic / iStock.com

Examine Your Spending

Adam Wood, co-founder of Revenue Geeks said, “A good budget begins with a thorough examination of your spending and income…You should start by evaluating how much you spend in a typical month using bank account and credit card statements, then comparing that to how much you actually bring home.” If your income is less than your expenditures, look for where you can make cuts.

Good News: Gen Z Teens Exceed Past Generations in Financial Literacy

benedek / Getty Images/iStockphoto
benedek / Getty Images/iStockphoto

Look For Jobs in Areas With Low Living Costs

When looking for a job, Johnson recommends looking for those in areas with low living costs, which can also mean remote work. “You can also partner with other remote workers to live somewhere less expensive than the main market,” he said.

See: Surprising Ways Gen Z and Millennials Are Worlds Apart Financially

Vladimir Vladimirov / Getty Images
Vladimir Vladimirov / Getty Images

See If You Qualify For Affordable Housing

Additionally, see if you qualify for a budget apartment or special housing counseling through the U.S. Department of Housing and Urban Development, said Hemal Patel, founder and writer at Personal Finance Gold. This could save you a ton of money on a major expense.

Options: These Are the 15 Best Cities for Gen Z To Live Well on a Budget

PHOTOBUAY / Shutterstock.com
PHOTOBUAY / Shutterstock.com

Open a Savings Account

According to McCullen, “Opening a savings account is a critical step in your journey to financial independence.” She recommends setting up recurring automatic transfers to “pay yourself first” before taking on monthly discretionary expenses.

Find: How Will Teens and Gen Z Invest Their Money? Think Low-Risk, ESG and Roboadvisors

martin-dm / Getty Images/iStockphoto
martin-dm / Getty Images/iStockphoto

Create a Savings Mindset

Rick Munster, a certified HUD counselor, recommends that young adults should save money from every paycheck not only for the practical side of things but because “getting into the habit of savings is crucial to long-term financial success. Equally as important is developing the ability to not touch the savings unless absolutely necessary.”

Money you put away when you're young will be an important buffer in years to come.

Check Out: 50 Ways To Live the Big Life on a Small Budget

Anchiy / Getty Images
Anchiy / Getty Images

Avoid Debt

One of the hardest financial lessons for young adults to learn, said Amy Shunick, corporate financial controller for BPKC, is learning to avoid debt. “The first step is to avoid signing up for credit cards with hefty annual fees or high APR.” A card without fees can be good to build credit and cover bills between paychecks, she said.

Additionally, said Scott Nelson, CEO of MoneyNerd Ltd., young people should avoid taking out loans or using credit that can’t be paid back. “Keep credit utilization down and always make payments on time and always look to improve your financial education,” he said.

Read: 30 Ways To Dig Yourself Out of Debt

SDI Productions / iStock.com
SDI Productions / iStock.com

Get a Side Hustle

If your main job just isn’t bringing in enough income, Shunick encourages young adults to look for side hustles such as virtual assistant or transcriptionist. Jobs that are “perfect for college students looking to cover bills between classes and don’t require prior experience.” Arts students can sign up for freelance services such as Fiverr “to offer writing, photography, or even design services,” she said.

Other side hustles include driving for Uber, delivering meals or using Amazon Flex to deliver products, said Tanya Zhang, co-founder of Nimble Made. “You may also explore doing transcription work, babysitting, walking dogs, giving fitness classes, or even teaching kids yoga as a side income.”

Helpful: 10 Ways To Bounce Back From a Heavy Spending Month on Your Credit Card

Aaron Amat / Shutterstock.com
Aaron Amat / Shutterstock.com

Stretch Your Dollar

Once you’ve gotten the hang of budgeting, you should become good at assessing how much money you really have to spend on things. But you can always look for deals, coupons and other ways to save money, said Andrea Woroch, consumer finance expert. “Think about how you can stretch your dollars further. For instance always look for used options first when it comes to things like cars, furniture, clothing and sporting goods.” She also recommends using coupons and looking for deals wherever you can find them.

Helpful: 15 Ways To Dramatically Increase Your Income in 2021

jacoblund / Getty Images/iStockphoto
jacoblund / Getty Images/iStockphoto

Don’t Compare

Brian Walsh, CFP and manager of financial planning at SoFi, recommends that you try not to compare your lifestyle to others. “Studies have shown that social media leads to comparing your lifestyle to others and increases the likelihood of spending more to avoid FOMO (fear of missing out).”

Instead, focus on gratitude for what you do have, and plan for ways to improve your financial situation in the future.

See: 37 Life Hacks That Will Save You Money

nevarpp / iStock.com
nevarpp / iStock.com

Put Money in a 401(K)

This might not be a tip to help you immediately, but it will really pay off in the long run and help you survive later in life. If your employer offers a 401(K) retirement program, absolutely take advantage of this by contributing something monthly to this account. “The earlier you contribute to a retirement fund, the longer it has to grow with compound interest,” said Erin McCullen, head of deposit products at Bank of America. “Be sure to invest at least enough in your 401K to capitalize on your employer match, which is essentially free money.”

More From GOBankingRates

This article originally appeared on GOBankingRates.com: How To Survive Financially When Your Parents Cut You Off

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting