When you move into your first home it is a very exciting time but it can also be quite scary. There are many things that are now your responsibility that you probably did not give a second thought to when you lived with your parents. One of the most important things to think about is your financial situation. If you get off on a good financial footing then this will make your life so much easier. Making the following money moves when you first move into your own place is a good starting point. Here are six you should really practice.
Start Saving Immediately
Having an emergency fund to fall back on is essential when you are living independently. The best place to put this money is in a bank account where you can get to it easily when needed. It will pay to shop around for the account that gives you the best rates. The total amount of money that you should aim to have in your emergency fund should be equivalent to three months wages. Even if you can only afford to save a small amount each month to begin with, it is certainly worth getting in the saving habit.
Create A Budget
It is also really important that you know exactly how much money you have coming in and going out. This will show you how much money you can comfortably afford to put away each month. It will also help you to ensure that the new expenses that come with living in your own home are affordable. A budget can help you identify which areas you can cut back on if money is a bit tight but in order for your budget to work effectively it is important that you stick to it.
Take Control Of Any Debt
If you have credit cards or other debts then you need to ensure these are manageable. Closing accounts can actually damage your credit score so you don’t necessarily have to take this action. A good place to start is to look at which cards have the highest rate of interest and start to pay these off first as this will save you the most money in the long run. You should always aim to pay the full amount off your card each month and pay a little bit extra if there is a balance so that this will start to reduce.
Ask Your Employer About Retirement Plans
Retirement may seem like it is a long way off but it is something that you need to think about. The main benefit of using a retirement plan offered by your employer is that they will also make contributions on your behalf on top of what you pay in yourself. This is often the easiest way to get some extra money in your retirement fund and because your contributions are deducted at source then you are less likely to miss the money. If you change jobs then you will still be able to keep the plan in place but you will be responsible for making the necessary contributions.
Learn How To Do Your Taxes
Although some taxes will be taken straight from your paycheck, you could still end up with a big bill if your withholding is not correct. If you are self employed then you will be responsible for paying all tax on your income yourself. If you are new at doing your own taxes then there are a lot of guides on the internet that can help you or you could pay a professional to do it for you. Make sure that you have all the credits and deductibles that you are entitled to in place so that you are not paying more than is absolutely necessary.
Be Make Sure You Are Fully Insured
The chances are you would have been covered by your parents insurance when you were living with them. There are a number of different insurances that you will have to take out as a homeowner in addition to any auto or health insurance that you will need. Get quotes from a number of different companies so that you can be sure you are getting all the cover you need for the right price. Do not be tempted to skip any insurance to save a bit of money each month because if the worst happens then you could find yourself in considerable financial difficulty.