It’s still a week before payday and you barely have enough money to get you through --- welcome to the real world.
Getting out of college, getting a job, and living on your own are all fairly romantic moments. These are the moments that you should be proud of. You start to dream, make plans, and live the life you think you deserve. However, as soon as you believe your own hype, you start losing it. Reality check: you have bills to pay, you have to feed yourself, and you have got to keep it together.
In his book “Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone,” Eric Klingenberg estimated that the number of singles and young adults living alone has increased by 30% worldwide over the past decade. The younger generation do not want to isolate themselves by living on their own; rather they regard living alone as a period of personal growth before finally deciding to settle down. In the process, they invest on a car, a condo, and even a giant flat screen TV. While it presents more responsibilities, living alone is an exciting phase.
Condo living is a popular and attractive lifestyle choice for young and middle-aged professionals. It gives a sense of independence, security, and comfort. However, it also presents a myriad of challenges especially when it comes to financial responsibilities. Single condo owners know it all too well: the luxury of condo living does not come cheap.
If you are a condo owner or planning to be one, here is a guide on condo budgeting and keeping your sanity.
Follow the 50-30-20 Rule
Arthur Isabella, author of “FAFSA Made Easy: Getting the Most Out of College Financial Aid,” recommends allotting 50% of your income to fixed rates like condo mortgage, electricity bill, and other utilities; 30% to fun stuff and 20% to pay your debts and save for retirement and insurance.
Back to Basics: Use an Envelope
Go old school and stay on budget by maintaining cash envelopes. This will help you stick to cash for everything. Label each envelope with the purpose it is intended for and each time you take out money, write in front how much you got and how much was still remaining. This should make you think twice about spending too much because you can actually see your money getting spent. It will make you realize that a new pair of shoes could strain your budget.
Make a List
Another old school trick is keeping track of your finances by making a list. Most people try to manage a list as soon as they start earning money but quickly get tired of it. It sure is exasperating but helpful for an effective household financial management.
The rule is: you have to know where your money goes. It is not enough that you know the big chuck went to the payment of your condo and other utilities because sometimes it’s the small things that hurt --- impulsive shopping, IMAX screenings, drive-thrus, etc. This way you will come up short less often.
Stop Swiping That Credit Card
Credit cards are not cool. Tell that to yourself over and over again until you believe it. Do not charge anything to your credit card that you know you can’t pay at the end of the month. Banks and credit card companies charge around 3.5% from your outstanding balance and the longer they are unpaid, the deeper you are in trouble.
Never pay simple pleasures with credit cards. Don’t watch a movie, don’t buy a pair of new pants, don’t have a fancy dinner on a Friday night, and don’t get your daily Starbucks fix if you don’t have cash. These things are not worth paying on credit. A refrigerator on a 0% three-month instalment is (if it falls on budget).
Save, save, save
There is no single recommendation with how much you should save each month. Some financial experts peg it at 10% while others one-third of your salary. This should of course depend on your income and financial deliverables. However, one thing to keep in mind is to set aside your savings as soon as the pay period comes in instead of saving everything that’s left at the end of the month because chances are, there won’t be anything left.
You are probably like everyone else whose income closely matches expenses but re-evaluate your budget and you will see that saving is possible. This should cover financial emergencies as well as essentials in maintaining a condo lifestyle. So, start saving as early as possible and get used to it.
Emergency funds are for emergencies
Allocate some funds for emergency. Again, it does not matter how much but make sure that you do. Whether you like it or not, bad things will happen and you should be prepared for it. Make sure that you don’t spend it on a new phone model but save it for real emergencies like unexpected repair needs for your condo.
Rethink Your Spending
How much are you spending for lunch? Do you go to coffee shops for your morning caffeine fix? How often do you buy clothes? A helpful budgeting tip for young professionals who are easily tempted by unnecessary splurges is to regularly re-think the way you spend. Yes you’ve earned it but that is precisely the point. You worked so hard for it so don’t waste it and overindulge. Try to prepare dinner at home and start bringing your own coffee to the office.
“D” is for Discipline
“D” is not for debt. Melissa Jarman, director of student banking at RBC, recommends that you organize debt in order of interest rates. Prioritize paying off the debt with the highest interest rate to keep it from being unmanageable. Consolidating loans under one umbrella with a lower interest rate is also an option. Pay your debts on time and pay more than the minimum required amount whenever possible.
Spend your Bonus Right
Most employees and professionals get more than a month’s worth of bonus every year. Take advantage of this and have your condo mortgage adjusted. This will result in lower monthly payments that will give more wiggle room in your budget.
Have Fun at No cost
If your budget is tight and your co-workers ask you to join them in some pay day Friday night fun, you don’t have to say “no.” Invite your friends over at your condo for some night swimming or a few drinks. Go for potluck. You have no idea what a breather this is from the regular bar parties. After all, what’s the point of living in a condo if you can’t enjoy everything it has to offer?
Do not think that budgeting limits the fun and restricts the way you want to live. The truth is if you make sound financial decisions, it will increase your choices and relieve constraints and hassles. Condo living entails great financial responsibilities but if you stick to a condo basic budgeting checklist, you are well on your way of enjoying the single life and the delightful pleasures of living on your own.