This post may contain affiliate links, allowing us to earn a commission on the products we would recommend to our families and closest friends. You can find more info on our Legal Stuff page.

Thanks to fellow S&S reader, Lana, for these tips on managing your money when you’re just getting started on your own.

Do you have a post or topic to contribute? Contact Us! We love hearing from you.

Leaving Home: How To Look After Your Money When You’re Starting Out

When you’re starting out, your finances can seem like a huge and overwhelming topic, and many people just don’t know where to begin.

That means that a lot of people ignore their finances. They don’t think about what they’re spending, and they don’t look at their bank statements often enough. They just use their credit cards and hope for the best.

But if that doesn’t sound great to you, here are some tips on how to actually manage your money when you’re starting out.

Learn To Budget

First of all, it’s time to learn to budget.

Take a look at your payslip every month, and figure out how much money you’ll get paid after taxes. Depending on where you live and what you do for a living, your taxes may or may not be taken out of your payslip immediately. If your employer doesn’t tax the taxes out of your paycheck for you, set aside your estimated taxes due immediately in a savings account. You don’t want to be short when it comes to tax season!

After your taxes, pay yourself before you pay any of your bills! It’s a good idea to put 10% in a savings account for emergencies.

Then consider your expenses. Housing is the biggest expense for most of us. In general, you want to spend less than 40% of your take-home pay on your rent or house payment. If you can get away with less than that, great! But the cost of living in many big cities is hugely expensive these days so you may have to scrimp and save in other aspects of your life.

Then your other expenses. Figure out how much you need to cover expenses like utility bills, food, and transportation. When all those obligations are accounted for, you’ll know how much money you have to spend on socializing and other more fun aspects of life.

If you often find that you accidentally spend too much, why not take your budgeted amount of cash out of the bank each week instead of using your card? It’s easier to know exactly how much you’re spending.

Purchase A Used Car

Remember: everybody needs a car.

They’re expensive, especially with parking, insurance, and maintenance costs on top of the cost of the car itself. If you live in an area with solid public transport, you may not need your own vehicle.

But of course many of us really do need a car. In that case, consider purchasing a used car rather than a brand new one – it is cheaper upfront and the insurance costs will be lower too. Selecting a preowned vehicle can be difficult because there are so many options, but there are ways to narrow it down. If you don’t know much about cars, go to a dealership rather than buying a vehicle from a private owner. At dealerships, cars have to go through strict safety checks. A car from a dealership may be marginally more expensive, but you can feel reassured that the car is safe.

You also need to think carefully about what sort of car you really need. If you’re driving short distances in a city, a small fuel-efficient car that you can easily park would be a better option than an SUV.

Pay Off Your Credit Card

If you use a credit card, it is vital that you pay it off every month.

Being reliable with your credit card is a great way to improve your credit rating. But not paying it and letting the interest mount up is something that can affect that credit rating very negatively in the future. Set a reminder on your phone to pay it off every month to keep yourself out of financial trouble.

Live With Roommates

You may want to live alone, but when you move out of your parents’ house it’s a great idea to move in with roommates.

Being able to split the rent with other people will save you a huge amount of money. But living with roommates is about more than that. If you’re moving to a new city, your roommates can be an in to some of the city’s best places that you won’t find in a guide book. You might become friends, which means you’ll have someone to blow off steam with every night after work.

Even if you don’t get along with your roommates, that’s okay. One of you will move out eventually. For the time being, it might be worth putting up with a roommate you’re not crazy about to save money on rent. And one day in the future, it will all just be a funny story you can look back on and laugh at.

Weigh It Up: Experiences Vs Stuff

When you’re earning for the first time it can be tempting to fritter your money away. Because when you can afford stuff, there seems no reason to stop yourself from making purchase after purchase.

But the truth is that once the excitement has settled, you may feel that you don’t have much to show for those purchases other than a wardrobe full of clothes you don’t wear, shoes that hurt your feet, and knick-knacks that you never really look at.

Instead of using your money to buy stuff, consider using it for experiences instead. A weekend trip, a show at your local theater, dinner with a group of friends. Memories are what you’ll keep with you forever. Stuff is temporary.

Create An Emergency Fund

If you aren’t earning much, putting aside some cash to create an emergency fund may seem like an unimportant thing that can be left for another day. But the truth is that having an emergency fund is crucial, even if you don’t manage to put much in there.

Emergencies always come up unexpectedly: a sick pet, medical bills, car repairs, lay-offs. An emergency fund will keep life’s little emergencies from completely derailing your financial progress.

Moving out and figuring out your finances for the first time can be overwhelming. But with these tips, you’ll have a well-balanced financial plan that lets you have fun while being a responsible adult.