If you have a senior student or a young adult at home who is not currently planning on going to college or into the military really wanting help to know exactly how to launch to the next step in life, here are a few tips to get them started to independence. As always, everyone has differing living situations, goals, and dynamics so all of these tips are ideas to adapt to your own family.
As a family we are not in a great hurry to see our young adults leave the nest or “kick” them out when they graduate. The reason we had to line out and give so much detail on how to launch is the result of a request from a young adult in our sphere and one of our own children who really wanted very specific instructions financially on what to do next now that they had graduated. Seeing how much everything costs in the world from their lense was overwhelming even after going through financial literacy classes in highschool.
Yes, when you are hit with the full spectrum of adulting all at once, it can be very heavy to the heart. Many of us had the blessing of a more gradual exposure through college dorm life or the military. Without using those two options, the full adult load hits a young adult full on. But, if you break it down into steps, it can be more mentally do-able and less overwhelming.
These tips are from the demographics of where we live in rural Washington state with expensive housing and apartments compared to jobs lower on the salary range in the area, high taxes, and a car is required to get anywhere. One of our children is getting creative and renovating an old vintage RV in the backyard in the hopes of living in that for one’s “own” space instead of shelling out for an expensive small apartment. Whether that pans out, we shall see but we are very excited to see the adapting that is going on in thinking of the future.
Please note that I am not a financial advisor and do not work in the financial industry. All these tips are what we are practicing ourselves and share in the hope they might give someone else some ideas as well.
Launching
“Launching” is the term used for graduated senior student or young adults who are living at home and are in the process of transitioning to independent living whether in the home or out of the home. Usually, the term “launching” refers to the young adult making that step to moving out and continuing on their journey in the adult world.
In today’s world however, launching can be pretty hard as a single person when you consider the cost of housing, shortages of affordable housing options, job locations, etc. Depending on where you live, the seed / egg money to save before looking for housing outside the home will vary hugely. It will also depend on what the young adult’s goals and expectations are in their first lodgings. Some may have a rude awakening with what they find for options in reality versus what they see on TV or movies. Others will be creative and make it work with what they have for the time being knowing that it is a temporary stage in life.
Launching to Indepence Specific Tips
1. Job to 10,000
- Find a local job and live at home if you are allowed. Save as much of your paycheck as you can with the goal of saving $10,000. This does not take long (our minimum wage is over $16/hr here in WA) if you don’t have rent or your parents are charging low rent.
- If you are unable to stay at home for this short duration of saving, pick a place to stay with roommates that your share of the rent is no larger than 25% of your pay and calculate other expenses to see if that amount works for your budget.
- Save 10-30% of your paycheck to achieve the $10,000 goal whether single or planning on marrying in the near future.
- Avoid debt for steps 1-4 of this article.
- Why $10,000? In the area we live this amount will cover first and last month’s rent while keeping some in savings for shortfalls and the time it takes to fine tune a working budget. Take into consideration these factors when coming up with the amount for this initial nest egg.
2. Getting your affairs in order
Now that you are over 18, it is a very good time to get some legal papers in order. These will help you greatly if you become incapacitated for any reason and can’t speak for yourself. These forms will enable family or friend to speak for you to doctors, hospitals, banks, work, etc. I know this seems very “senior citizen” like, but the truth is that your mom or dad can no longer speak for you if you landed in the hospital unconscious from a dirt bike crash or hurt on a hike.
You can get these forms for relatively inexpensive from Suze Orman. We were able to find this bundle on sale at the time for $18. Most banks will notarize the forms for their members. If you need to provide your own witnesses, you can bribe your two friends with coffee or lunch afterwards.
3. Engagement or Not?
Engagement:
- Now that you have your nest egg money, it’s a good time to consider engagement if this is your immediate goal.
- Guys: pick a modest ring, talk to the gal’s dad (if an option), ask the gal.
- Keep your money accounts separate from each other until married.
- Communicate with each other and enjoy the process.
- Complete pre-marital counseling with pastor. Apply for marriage license.
- Continue your education to upscale your skills and progress in pay and responsibility through work experience, apprenticeships, work paid training.
Guys
- Continue to save while at home for future living arrangement and planning honeymoon (if an option).
- Slowly acquire large furniture like couch, table, etc. Used from Craigslist, clearance, and such for your future place to live. Can have your fiance help you choose.
- Consider rehearsal dinner expense if that is an option.
- Research housing options** and prep for any prior requirements needed like references or credit. If you don’t have credit, you might consider whether your parents would allow you to be on their credit card as an “approved user” so that you can piggy back off of their credit score without using their card for purchases.
Gals
- Continue to save your nest egg. If you become engaged before your $10,000 nest egg: that is ok, just continue to save as if you weren’t.
- Spend engagement time slowly planning wedding with what you can afford.
- Get groom’s wedding band.
- Slowly acquire household goods for future married home.
- Keep your money accounts separate until officially married. Then combine them together after marriage.
No Engagement in the Near Future:
- Now that you have your nest egg $10,000, you can consider moving towards independent living outside of the family home if that is the goal. Look for rent that is no more than 20-34% of your pay.
- Calculate your other expenses and see if that amount adds up to what you make (make sure to include at least 10% for savings).
- Consider nontraditional options.**
- Consider roommates to spread the rent and be able to save more.
- Talk to church rental owners to keep a look out for you. Many rental options are by word of mouth only.
- If you have trouble being accepted for a rental because of lack of credit: you can consider a couple of options to establish credit. Talk to your insurance broker or bank for which options will actually help or not. For example: We thought that getting a very small loan and repaying it over a year (with the actual loan money) would help but it actually didn’t.
- Address change for mail, accounts, driver’s license, etc.
- Continue your education to upscale your skills and progress in pay and responsibility through work experience, apprenticeships, work paid training.
- If at any time you wish to enter engagement, switch to the left column.
- Skip to step 5 if not becoming engaged
**Tiny houses on wheels, modular temporary housing units, large rv’s if you have access to park on family property, yurts, caretaker for apartment complex that includes a unit to live in, basement “apartment” in a private home, etc.
4. Housing for Marriage
- At least 2-3 months before the wedding, guys: secure housing. Look for living accomodations that are not more than 20-34% of the guy’s pay. Even if the gal is working, you can use her paycheck for extra expenses and save the bulk of her pay. Consider nontradional options as well.** Calculate other expenses in with this and see if your pay covers this amount of rent.
- Talk to church rental owners to keep a look out for you. Many rental options are by word of mouth only.
- If you have trouble being accepted for a rental because of lack of credit: you can consider a couple of options to establish credit. Talk to your insurance broker or bank for which options will actually help or not. For example: We thought that getting a very small loan and repaying it over a year (with the actual loan money) would help but it actually didn’t.
- Slowly move furniture and supplies in. Guys can move in and set up.
- Get married, honeymoon. Return as a couple to married housing and move the gal’s stuff to the married house.
- File marriage license, change of name for the bride, combine bank accounts, put both names on all vehicle titles and beneficiary policies. Make adjustments to health insurance policies. Change checks to married names, gals file for name change at court house, social security, and apply for new driver’s license under married name and address.
- Address change for all mail.
- Pick church to attend together if not already done so.
- Proceed to step 5.
5. Next Step Finances
- Tithe 10% each month: Not a commandment, just a choice to start out recognizing God and His provision over you.
- Continue to save 10-30% of pay until you have 3-6 months wages saved in the bank as your default emergency fund in case you get laid off.
- Each month, sit down and plan out that month’s expenses to know what you are working with.
- Be sure to either divide up bi-annual or yearly expenses into monthly amounts to save for or mark on calendar what needs to come out of your accounts to be covered. Do this yourself if you are single or together if you are a couple. Do not let your checking account get below $500. There are numerous budget forms for examples online and through websites such as Dave Ramsey.
- Balance your bank account monthly: use a ledger, computer file, or phone app alongside your bank app. Relying solely on your bank app will not help you know what your available balance actually is since some withdrawal transactions are delayed in real time and do not warn you of autopayments ahead of time.
- The amount of your 10-30% savings over the 3-6 month’s emergency fund that you might need in the next 3-5 years can be put into a High Yield Savings Account (e.i. Sofi). Check Motley Fool website or Call to Leap on Facebook for current good options.
- Savings that are above what you are thinking you will need in the next 3-5years for a large event or purchase can start working for you by investing in a Roth IRA that is invested in an index fund. Look for investments that give 4-6% annual return. You can max your yearly contributions to this fund at $5000 a year from earned income: E.G. of index funds: VOO, SPY, then QQQ are good stock fund options through Vanguard or Fidelity inside your Roth IRA . Check Motley Fool and Call to Leap on Facebook for recommendations and instructions on how to open the Roth IRA.
- Diversify your portfolio by investing in some liquid assets such as silver or other metals. Gold is too high at this time so don’t focus on investing in gold at the moment.
- Maximize your employer retirement matching fund.
- Continue your education in or outside of work to upscale your skills and responsiblilities.
- If you have a trip or special purchase, consider a special savings “jar” for it or increase your bank savings account amount above the 3-6 months emergency fund.
- Do not carry credit card debt. Pay off in full each month if you use a credit card at all. Using credit is not advised at this stage- not even for the air miles (you don’t have enough money to travel extravagantly right now anyway unless you have a job that you are a frequent flyer).
6. Family, Career, More Space
- Onward and upward. Consider starting a family, advancing career or education, larger living space, home ownership if an option (be careful to consider how much you can actually afford vs. how much the bank says you qualify for), volunteering and charitable causes.
- Save for a down payment on a house (if you wish to own one) to avoid mortgage insurance requirements if possible.
- Consider nontraditional housing options or starting small and trading up as the market favors selling or your home is improved or increases in value.
- If considering buying a home, use a “fixed” mortgage loan vs. a “nonfixed” if possible.
7. Obviously
These tips are played out in a scenerio, but obviously life happens and the best laid plans might quickly move on to plan B, C, D etc. These tips are just one of many ideas for the graduating senior or young adult that really wants or needs very specific “how-to” ideas to get started. Some young adults will only go ahead learning for themselves fly-by-the-seat-of-their-pants style so take these tips with a grain of salt.
Sometimes militantly adhering to the most detailed plan of action can squeeze out hearing and following what God has planned for the young adult. Be careful when planning out “your life” that you leave room in your mind and heart for detours, side swerves, and other paths from the Head Master Designer. Since His way will ultimately be the very best path to take over any plan you could possibly put together. Start your journey with your plan but be flexible.
“In all your ways acknowledge Him,
Proverbs 3:6 NKJV
And He shall direct your paths.”
