Adulting 101: How to (Financially) Transition Into Adulthood

five college friends study together at a table and discuss their financial transitions of adulting

Key Takeaways

  • Budgeting is important for managing expenses and saving towards goals as an adult. Make a list of income and expenses, allocate funds accordingly. Use free tools to help track spending.
  • Have an emergency fund to cover unexpected costs like car repairs or medical bills. Aim for 3-6 months of basic living expenses if possible.
  • Address any student loan debt head-on. Understand the amount owed, interest rates, and payment options. Tackling debt can help reach other life milestones.
  • Pay off credit card debt using a strategy like the debt snowball or avalanche method. This can help pay off debt faster and save on interest.
  • Consider taking on a side job or gig work for extra income to save more or pay off debt faster. Options include freelancing, driving, dog walking, online surveys, or starting an online store.

You're moving out of your parent's place. Your bags are packed, and start a new job. Welcome to adulting! Are you excited or feeling a little overwhelmed? Either way, you're not alone.

There are many important things to consider when moving away from home and starting your new life as an (official) adult, but money might be one of the most pressing concerns. Having your money matters squared away could help alleviate any stress you might feel. If you're transitioning into adulthood, here are some financial tips to consider that might help make life a little easier.

Budgeting for Grown-Ups

Budgeting might sound like a big deal, but it's surprisingly simple. Here a few steps to get you started. 

  1. List the costs of your basic living expenses, such as rent, food, household items, and utilities.
  2. List long-term savings goals like retirement or a down payment for a home.
  3. Figure out your take-home pay, which is the amount that ends up in your checking account after taxes, allocate monthly funds to all of the items on your list.
  4. If you're moving away from home for the first time, you may also want to factor in one-time moving expense - anything from the cost of a security deposit to furniture and household items for the new place.

There's no shortage of free budgeting tools available. The Federal Financial Literacy and Education Commission offers budgeting calculators, worksheets and checklists that could help you get started.1 A quick online search could also provide you with a wide assortment of websites and smartphone apps that could help you track your spending and get serious about budgeting.

Setting Up a Rainy Day Fund

You might have a solid budget in place, but are you prepared for the unexpected? An emergency fund could help tide you over financially if you ever lose your job, need to fund a major car repair or an emergency trip to the dentist. Some people try to save at least three to six months of basic living expenses, but everyone is different. Consider your own needs when determining how much you want to put into your rainy day fund.

Let's say your car breaks down and need money to replace the battery: is this an appropriate use of your emergency fund? It could be helpful to decide ahead of time when it would be OK to tap into your rainy day savings. An impromptu weekend getaway, for instance, is probably not the best use of your emergency fund. It's usually better to have something than nothing at all, especially in an emergency. It might be helpful to start small and save as soon as possible.

Paying Down Student Debt

Student loan debt is a common concern for those transitioning into adulthood. Do you have a handle on your student debt? If not, consider diving into your debt headfirst. Think about:

  • How much you owe on your student loans
  • Interest rates
  • Payment plan options

Then, consider tackling your debt Often, a big part of adulting is taking ownership of the debt you took on for your schooling.

Student loan debt could hinder your ability to reach other major milestones like getting married, starting a family, buying a house and so on. Consider student loan debt when budgeting and put yourself on the right track for tomorrow.

Tackling Credit Card Debt

If you have credit card debt, there are many ways you could approach paying it off. You could adjust your budget to make debt management an important goal, which could help you pay off debt more quickly. Two popular methods include the debt snowball and avalanche method.

Snowball Method

The debt snowball method focuses on paying off the debt with the smallest amount first, while making the minimum payments on other debts. After paying off the smallest debt, the focus then turns to paying off the next smallest debt. The goal of this method is to keep people motivated by helping them get a series of small "wins."

Avalanche Method

The debt avalanche method focuses on paying off the debt with the highest interest rate first, while making the minimum payments on other debts. After paying off the debt with the highest interest rate, the focus then turns to paying off the debt with the next highest interest rate.

The goal of this method is to help people save more money by paying less in interest. Similar to paying off student loan debt, paying off credit card debt could help you reach major milestones sooner.

Taking on a Second Job

If you're trying to put away funds to save for a rainy day or help manage debt, consider taking on a second job to bulk up your income. There are often plenty of ways you can earn extra money, such as:

  • Freelance writing
  • Taking online surveys
  • Driving for a ride-sharing service
  • Dog walking
  • Starting an online store

You don't have to put all of the money you earn from the second job into savings. You could put some of that money aside for other things, like a vacation or a new car.

While money matters are just part of the picture, they're often an essential part of adulting. Getting your financial ducks in a row could help alleviate stress and put you in a better place as an adult. Congratulations, you've (officially) transitioned into adulthood — both mentally and financially.

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  1. MyMoney Tools.

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