Buying a house and even renting an apartment can be super expensive these days, especially if you live in certain cities in Canada. Take Toronto, for example, where the average home price is a whopping $824,336, and rent is still pretty steep at $2,550 for a 2-bedroom unit.
With prices like these, it’s no wonder that more and more adults are living with their parents a lot longer than they did decades ago. Not to mention the countless students who are bogged down by ever-increasing college and university tuition over the past few years. These days, young adults are loaded with debt and can’t afford the housing and even rental prices that they’re faced with (click here for a comparison of rent vs. buying).
According to the National Association of Home Builders, the share of young adults living with their parents or other relatives increased to 26.3% in 2016 from 15.3% in 2000.
But are you doomed to live in your parents’ basement forever? Not necessarily.
If you start to develop healthy and positive financial habits today, there’s no reason why you can’t be on your own at some point in the near future. Here are a few habits to pick up that can help you do just that.
Do you know what the hidden costs of buying a house are? Learn here.
Get a Job
Sounds like a no-brainer right? Well, you’d be surprised at how many young adults slack off in this department. If you’re ever going to fly the coop and start living life on your own, you have to establish a career sooner rather than later.
A lot of millennials who have a degree or college diploma may be holding out for that awesome job that pays well. But in the meantime, they’re stuck at home waiting for the phone to ring. While you’re out there pounding the pavement for a good job, take some sort of income-generating gig to help you bring in some money.
You might even want to consider freelancing your services on places like Upwork to make a few bucks here and there. People actually make a pretty decent living off sites like these. Either way, getting a job – whether part-time, full-time or even casual – is your first step to financial independence.
Check out this infographic to learn about the cost of buying a house in your city.
Pay Down Your Debt
Whether you have student debt, credit card debt, or any other type of debt, it’s important to pay it off as soon as you can. Be very diligent about outstanding debt, and don’t just leave it to fester and compound in interest.
Personal debt is a huge deal with young adults, particularly those who have recently graduated from college or university. Debt can definitely be the main factor that holds young adults down and prevents them from having the finances to be able to support themselves outside of their parents’ homes.
Interested in what your debt relief options are? Read this.
In addition to getting yourself some work, paying down your debt is another important task to take on right away. Come up with a plan of attack to get your loans paid off as quickly as possible. And if you have a few types of debt, figure out which one has the highest interest rate and consider paying that one down first.
Invest Your Money
It’s super important to commit your income to pay down your debt, as we’ve already mentioned. But if at all possible, try to save a portion of your income to investing for your future. The sooner you start investing, the faster your money can grow and start to work for you. This is especially important when you consider the prospect of buying a home or even retiring.
A safe way to start investing would be to contribute to an RRSP or open up a mutual funds account where you can make interest on money deposited but won’t expose your funds to the risk that is more typical of other investment channels like the stock market.
Save For a Rainy Day
Building up an emergency fund to fall back on is a great cushion to have. Once you’re out on your own, you certainly don’t want to be living paycheck to paycheck.
Before you make that big move, you want to have at least three to six months’ worth of expenses to fall back on in case you lose your job, you’re injured, you lose your apartment, and so forth. Just make sure that wherever you keep this emergency fund, it can be easily accessed right away.
How to start saving when you’re in debt. Click here.
Start Paying Rent
Your parents might be generous enough to allow you to continue living at home without having to financially contribute to household expenses. But even if you’re in this position, you may want to start getting into the habit of paying rent before the real deal happens.
By getting accustomed to having a certain portion of your income being dedicated to paying rent, having to pay an actual rent or mortgage will come more naturally. While you’re at it, consider pitching in for utilities and go out and physically pick up groceries too. These are all tasks you’ll have to do when you’re on your own, and the sooner you get accustomed to such chores, the easier it will be when you’re on your own.
For more information about your credit score, take a look at this infographic.
Start Building Credit
It’s likely that you have no credit if you’ve never had a loan. Or it may even be possible that your credit is not where it should be if you’ve taken out a credit card or two and didn’t use it responsibly. No matter what position you happen to be in, you’ll want to take steps to either build credit or repair it so that when the time comes to rent an apartment or apply for a mortgage, you’ll have no trouble getting approved.
Apply for a secured credit card and make sure to make your payments on time and in full each month. Doing so on a regular basis can help establish good credit, which will open the doors to plenty of financial tools and products that you may not be able to access if your credit score was lacking.
Need Help Choosing a Financial Product to Help You Build Credit?
Many young adults still living at home have an issue with having either no credit or poor credit as a result of bad spending habits. But with the right financial tools and the appropriate spending habits, you can build good credit that will put you in a better position to make it out on your own. Get in touch with Loans Canada today to help you choose the right financial product for you.
