Renters spend a good enough share of the income on rent, and it becomes tough for young working professionals to save enough for the future. Additionally, while starting with a career or education, many young adults opt to live in shared housing to save money. But without adequate financial planning education, many fail to channelize their money in the right direction. We know managing finances can be pretty tough and with a considerable amount of rent outgoing monthly, saving money to grow becomes a challenge. Renters face the dilemma of living a good quality of life or saving some bucks for the future. With the right budget planning, they can do both.
We got your back here as we brought seven smart budgeting tips for renters to plan finances wisely.
- Analyze the expenses
One of the most crucial steps before you start planning your budget, is to analyze where you spend most of the money and optimize cash flow. You can monitor your expenses by looking into the credit card bills, if any, and keep an expenditure record in a spreadsheet. For instance, if you feel that you spend way too much money while shopping online, set a limit on your credit card. Similarly, if you are always paying for food in your shared housing, use an app to maintain a record. You may politely ask your roommates to split or pay you later.
- Plan efficiently
Planning just for the week or a month is not an ideal way to plan your finances. You may plan the meals of the week to save money on groceries, but planning finances for a month would help you save a decent amount of money. Monthly planning is a good exercise, and while you plan a rough prediction of expenses, don't forget to keep a few bucks for 'just in case' scenarios.
- Opt for renters insurance
Get renters insurance for a secure shared housing experience. Image Source: Canva
Renters insurance is a must in shared housing. Shared rooms for rent means you will be living with strangers, and ensuring your belongings' safety is necessary. A renter's insurance costs relatively less and covers all the valuables, including computers, laptops, etc. Getting renters insurance would help you plan the finances efficiently. Even though shared rooms for rent are safe, it is still better to be safe than sorry.
- Always save for a rainy day
You have no idea how saved money can help you on a rainy day and help you stay away from debt. Saving for a rainy day is a simple technique to set aside a fixed amount every month and keep it. If you live in shared housing, this amount can improve things even when they cost more. The aim is to have less debt. When you keep saving 100 dollars each month, you'll have 1200 dollars at the end of the year. God forbid, if something goes down, this amount will help, and you won't have to put the amount on your credit card.
- Try the 50-30-20 Rule.
The 50-30-20 Rule is quite famous, and you might have heard about it. If you live in a rental or shared housing, this trick will help you plan your finances efficiently. The trick says that you spend 50 percent of your earnings on your needs and essentials, mainly rent, food, and travel. The 30 percent goes to the wants that include partying, eating out, or shopping, and the rest, 20 percent, is to be kept aside as savings. This trick can be beneficial while you plan your monthly budget.
- Get a Roommate
Get a roommate to share rent. Image Source: Canva
- Work on the credit score
One of the most neglected factors while starting a career or as a student is the credit score. Students have to get a co-signer for their lease in cities like NYC and San Francisco as they don't have the required credit score. Building a credit score isn't tough, and you can start building your credit score right now! You can do this by putting your monthly subscriptions like Netflix or Amazon Prime on your credit card. The amount is detected each month automatically and helps your credit score to increase. This trick can be beneficial to students or young working professionals who live in shared housing.
Adequate planning helps you save money and widens the scope to grow. You can talk to a finance expert to get a tailor-made finance plan, but it is best to start with baby steps. Budgeting doesn't mean cost-cutting to optimize the cash flow. You may put your saving in the bank or invest in stock; it is entirely your choice. Make sure you know your money and spend it smartly.