MSU Extension 4-H Youth Money Management

Thinking of moving out on your own? You have got a job and it is time for a bit of independence. Good for you! However, before you sign the lease on that amazing apartment, it is important to look at where your hard-earned money will go.

According to the U.S. Department of Labor Bureau of Labor Statistics, in 2018 over one-third (36.5%) of the expenses of the average single, young adult living on their own were allocated to housing and utilities. Another 14.8% was spent on transportation and nearly 13% was expended on food. That adds up to 64% of all expenditures. Consider how those figures fit into your personal budget.

Start with your income. How much do you earn in a month? How do your current spending habits fit the model of having 64% directed toward housing, transportation and food? How willing are you to adapt your spending habits to ensure you can cover these expenses each month?

Let’s do the math. Michigan’s current minimum wage is $9.65 per hour. Assuming you work 40 hours per week, your take-home pay ($9.65 per hour x 40 hours, minus taxes) will be about $343. Each month your net income will be approximately $1475 of which $538 will go towards housing and utilities, $218 for transportation and $191 for food. Using these figures, let’s consider your options for housing, transportation and food.

• Housing. In many communities, finding housing for $538 per month might be challenging. Consider having a roommate or sharing a house with several others. Use your actual monthly income to do this calculation to estimate what you can afford to spend on housing and utilities.
• Transportation. If you own a car, you know gasoline and maintenance items like tires and oil changes can easily average more than $218 per month. To make your budget work, consider some alternatives like walking, using a bicycle or scooter, or sharing rides with others (pay the driver an agreed upon amount each week for a ride to and from work). A resourceful combination of these options might save you considerable money on transportation.
• Food. Budgeting for groceries can help stretch every dollar. Buying only what is on sale and in season, using coupons and buddying up with a friend to buy in bulk can shave dollars off your expenses. Making coffee at home will also keep more money in your pocket. The opportunity to eat at a restaurant may be seriously compromised, but if you like the idea of independence, the sacrifice is worth it.

Making a budget and taking steps to save on housing, transportation and food prior to moving out will help you make a financially successful transition to the reality of living on your own.

For more information on youth money management topics, check out the Youth Money Management page on the 4-H Youth Development website, contact your Michigan State University Extension county office or go to eXtension’s Personal Finance website.

As a part of our work, Michigan State University Extension provides career education programming. To learn more about the positive impact of MSU Extension and Michigan 4-H career preparation, money management and entrepreneurship programs, read the Impact Report: “Preparing Michigan Youth for Future Employment.” For more information or resources on career exploration, workforce preparation, financial education, or entrepreneurship, contact 4-HCareerPrep@anr.msu.edu.