College has come and gone and now it’s time to live on your own for the first time. There are a few simple steps that can make this new phase more manageable – at least when it comes to finances.
- Open a checking account: If you do not yet have your own checking and savings account, this is a good time to start. Setting up a checking account in your name allows you to take responsibility and view the inflows and outflows of your money.
- Build a budget: View the transition as an opportunity to consider your expenses while away from home. This can be as easy as taking a sheet of paper and drawing a table that includes the months along the top and expense types (for example, books, meals, and travel) on the left and then estimating the corresponding monthly costs. After totaling each month, you’ll have a good sense for what is needed.
- Discuss money sources: Charting out expenses and determining what it costs you to live on your own informs everyone and opens a dialogue around what options are available and appropriate. Consider where your spending money will come from. For instance, you may have enough savings from your summer job, you may be starting your first full-time job, or you may realize you need some help from your parents.
- Discuss an allowance with parents as needed: A budgeting exercise can illuminate a conversation with your roommates or enable you to live alone. By writing down real numbers, you can see what options work best. It’s important to understand how your finances are calculated so you can visualize how you will allocate your allowance throughout each month.
- Learn from your mistakes: If you spend your full allowance and/or monthly budget all in one weekend, it’s important to feel the consequences of these decisions rather than receive an additional stipend from your parents. For instance, this may mean you can’t spend on other items later in the month. Overtime, you should find your balance and will identify the best strategies for managing within your budget.
Transitioning to a post-college life can be full of unexpected changes, but money matters do not have to be one of them. At Brown Brothers Harriman, we can help facilitate these conversations between you and your parents and help prepare you with the tools needed to develop financial independence as you continue your path into adulthood.