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Defining Financial Security

Before we can properly dive into the steps one might take to move out of the home and become financially secure again, we must first define financial security. While it does not always look the same for everyone, having financial security generally means that you have the ability to cover your basic needs, with a little bit of a buffer. This might include having enough money to cover rent or mortgage payments, your utilities, transportation and food costs, but also set enough aside to cover any sizable and unexpected expenses that might come up. While you don't need to have a gigantic cushion in order to live securely, it is important to have a minimum three to six months of living expenses set aside just in case something life changing takes place, such as the loss of a job, medical emergency or any number of other unforeseen circumstances which might typically wreak havoc upon a fixed or limited income.

 

 

Living with Parents

Now that we have an understanding of financial security, let's discuss again the issue of Millennials living with their parents more specifically. Many Millennials who still live with their folks say that they primarily do so due to the high cost of rent, money concerns, or a result of job losses. While it is true that Millennials are faced with difficulties that many prior generations did not have to endure, such as crippling student loans and wildly fluctuating wages, more and more adults in their twenties and thirties are faced with the difficult decision of returning to the home of their parents. This difficult decision usually comes through no fault of their own, unless of course they made the decision to leave the nest prematurely, and is often a result of the lack of jobs in their field or the cost of living being so much higher than what they receive in wages each week.

 

Transitioning Out of the Nest

Regardless of why an individual has been forced to return home to their folks, there are a number of steps which can be taken in order to help transition adults out of the nest and into financial security once again. The following are a handful of tips which can be used to make that transition as smooth as possible.

 

Credit Repair

Many adults rely upon their credit to make major purchases such as cars or starter homes, due to this credit repair should be the first step for anyone wanting to increase their financial security. In order to improve one’s credit score, focus should primarily be put on paying off monthly obligations such as student loans, credit cards, and any other revolving lines of credit which might be open from individuals. Yet, it is also important to pay attention to how you make payments and be aware of any late payments which might hurt your score. The key when repairing credit is to avoid late payments, never miss a credit card payment, and always ensure that debts are within the right utilization percentage and not too much of your monthly income is being put towards monthly payments.

 

Millennials are a generation of young adults born between 1981 and 1996, who are now taking more responsibility than ever for their financial lives. The economic recession hit them especially hard, leaving many Millennials' credit scores bruised and battered. Millennials have a lot to learn, but with a few tips, Millennials can quickly begin to repair their credit.

• Check your credit report: The first step to taking control of your credit is to check your credit report. The Fair Credit Reporting Act requires that the three major credit reporting agencies, Experian, TransUnion, and Equifax, provide one free credit report per year to anyone who requests it. Checking your credit report is important because it allows you to detect any suspicious or incorrect information that could be influencing your credit score. Fixing any errors or disputable accounts can help you take control of your credit score.
• Make all your payments on time: Late payments can really drag down your credit score. Make sure to set up automatic payments if you are at risk of forgetting deadlines. This way, you don't have to worry about being late and can be sure that your payments are always on time. Additionally, a long track record of on-time payments is necessary for any lender who is considering giving you a loan or line of credit, so the sooner you start making payments on time, the better.
• Decrease your credit card debt: Carrying high credit card debt not only hinders your ability to pay off other bills, but it also drags down your credit score. Focus on paying off your highest-interest debt first, and then work your way down to the low-interest debts. If you are overwhelmed by credit card debt, contact your credit card company to see what debt-management options they offer.
• Re-build your credit: Once you have paid off most of your credit card debt, you can begin to re-build your credit. This can be done by opening new lines of credit and making regular and timely payments. Start small, with a secured credit card or a small loan, and make sure all your payments are on time, in order to establish a positive payment history.
• Establish a budget: Establishing a budget is a crucial step in long-term credit repair. A budget will help you to prioritize your expenses and stay on top of your debts. Write down your income and expenses each month, and make sure all your bills are accounted for. When you stick to your budget, it becomes much easier to stay on top of your payments and pay off your debt in a timely manner.
• Don’t close credit card accounts: Closing credit card accounts may seem like the best option to improve your credit score, but it could actually have the opposite effect. This is because closing credit cards can reduce the amount of total credit you have available, resulting in a higher debt-to-credit ratio, which can drag down your score.
• Watch out for scams: Lastly, watch out for credit repair scams. While some legitimate companies may offer credit repair services, it is important to recognize the red flags associated with scams. Be wary of any company that claims to have the power to remove negative information from your credit report, or asks for an upfront fee before providing the service.

 

Find Ways to Make Extra Money

There are a myriad of ways to make extra money over and above the traditional 9-5 job and the occasional side hustles. From freelance writing, creating and selling art, or doing photography and website design, there are many opportunities available to those who are willing to explore what is out there. Additionally, many cities are in need of part-time or seasonal workers who can help fill in the gaps of the service industry and provide a much needed helping hand with events and gatherings. Of course, many cities also offer work that is available for those who are interested in picking up a few extra hours for short term projects and the like.

• Become a Freelance Worker: The internet offers an incredible range of freelance work opportunities, from copywriting to web design to coding. All you need to get started is a laptop and internet connection and whatever skills you happen to have. With a little bit of time and effort, you can turn your talents into a lucrative side hustle. Be sure to take advantage of all the freelance websites that are available to you to find the best opportunities.
• Invest in the Stock Market: Investing in the stock market is one of the best ways to make your money work for you. Even if you only have a small amount of money to start, the stock market offers the potential to earn a great return on your investment. Plus, with the range of online trading platforms and mobile apps, it’s easier than ever to get started. Make sure you do your research and take advantage of the wealth of resources available to you before jumping in.
• Start a Blog or Website: For Millennials looking to make some extra money, starting a blog or website is a great option. Not only can you make money directly from the content you create, you’ll also be able to monetize your site with ads and affiliate marketing. Plus, having a blog or website can open up doors to other opportunities, such as paid speaking engagements, writing gigs and more.
• Drive a Rideshare: If you have access to a car, Uber and Lyft are great ways to make extra money. Not only can you be your own boss, but you’ll also have the flexibility to set your own hours. Just remember that there are certain requirements, such as vehicle age, for each service.
• Become a Tutor: If you have a particular area of expertise, tutoring could be a great way to make extra money. You can tutor local students or even offer online tutoring sessions through tutoring websites.  Best of all, tutoring sessions are a great way to earn a steady, flexible income.
• Start a Pet Sitting Business: Pet owners are always looking for reliable help to look after their four-legged friends. If you’re an animal lover, starting a pet sitting business could be a great way to make extra money. You’ll need to decide what services you want to offer and how much you’ll charge, and then start reaching out to local pet owners.
• Take Part in Research Studies: There are countless research studies that are looking for participants. From focus groups to clinical trials, you can make extra money just by taking part in these studies. Plus, you’ll get to learn something new while you’re at it.
• Deliver Food: Do you have a car and some spare time? You can make a good side income by delivering food. You can either choose to do it part-time or full-time, depending on what works for your schedule. Just keep in mind that you will be responsible for any vehicle related expenses, such as gas and insurance.
• Rent Out Your Space: Do you have an extra room or apartment that you’re not using? You can make some extra money by listing it on Airbnb or other similar sites. Depending on the area, you can make a decent amount of money from renting out your space.
• Take Surveys: Many companies are willing to pay you for your opinion. There are a number of websites that allow you to take surveys in exchange for cash or gift cards. One of the great things about taking surveys is that you can do it anytime and anywhere, so long as you have an internet connection.

 

Save Up for a Security Deposit and/or Down Payment

Many rental properties will require tenants to pay first and last month’s rent upon move-in and make them pay a security deposit to cover any potential damages to the unit. Similarly, prospective home buyers must have significant funds — usually around 20 percent of the purchase price — in order to put down as a down payment on a home. As such, many young adults are finding it difficult to save up the money needed to cover these costs. One way to ease the stress of a security deposit or home down payment is to create a specific budget and timeline that will be followed in order to save up the funds needed. By creating a timeline and budget that are specifically tailored to the money needed for either move-in costs or a down payment, adults are more likely to stick to the plan and accrue the money needed.

 

• Set a Budget: The most important step to take when it comes to saving money is to set a budget. Setting a budget will help you stay organized, keep track of your spending, and determine how much money you’ll need to save. Make sure to factor in all of your expenses and don’t forget to include the cost of the actual down payment or security deposit.
• Start an Emergency Fund: Having an emergency fund is one of the most important financial strategies for any millennial, but especially for those saving up for a down payment or security deposit. An emergency fund is a designated sum of money saved for unexpected expenses, such as medical costs, car repairs and more. Ideally, you should aim to have 3-6 months of expenses saved up in your emergency fund, but if you’re short on time, even putting away a few hundred dollars can go a long way. Having a backup fund can help prevent you from dipping into the funds needed for your down payment and security deposit.
• Cut Back on Your Expenses: The most obvious way to save money is to cut back on expenses. Take a look at your budget and consider areas where you can make alterations. You may even be able to find some money-saving tips specific to the down payment or security deposit, such as using a payment plan for the deposit.
• Make Economy-Sized Purchases: If you’re shopping for items that come in bulk, such as food, cleaning supplies or even furniture, consider buying them in bulk. Not only will you save money, but you’ll also save yourself the hassle of running around for multiple trips to the store.
• Automate Your Savings: Saving money can be a challenge, but it can be made easier by automating it. Most banks offer automatic transfers from your checking account to your savings account on a regular basis, usually at the end of each month. By automating your savings you’ll get into the habit of saving money without even thinking about it, and you can adjust the frequency or transfer amount as you go.
• Look for Extra Income Sources: Look for ways to efficiently increase your income or pick up an extra job. Also look into side gigs or freelancing, as these can add up to a significant monthly income.
• Use Your Tax Refund: Your tax refund can be a huge help when it comes to saving money. Just remember to keep the money from your refund separate from the rest of your bank account, and use it toward your down payment or security deposit.

Warning:  This post is neither financial, health, legal, or personal advice nor a substitute for the advice offered by a professional. These are serious matters, and the help of a professional is recommended as it can impact your future.