(Editor's note: The Practical Millennial is glimp's article series that dives deep into the common woes of millennials, and how it can be fixed — the practical way.)
Today's economic climate makes it difficult for millennials, or those between 24 and 39 years old as of 2020, to find a decent paying job that can fulfill all of their needs. That includes dining out and travelling, and mostly just enjoying life, especially for the twenty something. This mindset draws the side-eye of the older generations for wanting to spend more on leisure instead of saving up for the future. Because of this, independent living becomes harder for Kiwi millennials.
A survey from Rabodirect shows that adult children in NZ plan to move out of their family homes at 27 years old on average. For the lucky ones, it's just a matter of asking their parents for their first home deposit no matter their age. The majority are left to decide on a better, more viable option on how to 'adult.' Until then, staying with the parents is the best option.
Of course, there is nothing wrong with living with your parents, for as long as you help out with the work and expenses. But for others who are under a lot of pressure to make it big on their own fast, it can be a tad limiting. So when is the right time to move out?
The constant price increases in rent, food and utilities all while being underpaid is one major drawback for young aspiring homeowners. Because of this buying their own house is just not a priority. Home prices have increased to an amount that even newly married couples couldn’t afford. It would take years to pay off a mortgage, not to mention other financial obligations. So instead, they stay with their parents for the time being.
There are different avenues you can take to start saving up for a home. It doesn’t matter how much you make whether you’re an employee or a business owner, as long as you know how to manage your expenses well. With proper budgeting and choosing the right provider, you're rest assured that your money grows as you get older.
As early as 10 years old, parents can open a Kiwisaver account for their little ones, which they can use to enroll in school, to buy their first car, acquire their own property, and use the account for when they retire. Even if you decide to start at 30, you can still be able to save up for a home that fits your budget with the help of Kiwisaver home loan options that are personalised to accommodate all your financial needs.
Part of living independently is knowing how to cook your own meals. Consider living with your parents a crash course on cooking for yourself, so you can be ready when you do move out for good. You can save a lot more when you start buying groceries, and picking fresh and affordable ingredients for your meals. You’re also able to control what you take in a day, and avoid the unnecessary fees on takeouts. This way, you can eat better and save more money at the same time.
Choosing to stay at your parents' house is a conscious decision to spend less on many things in order to save up for bigger investments in the future. This also makes for a practical decision during the pandemic, where a lot of people have been laid off.
Not only are you not paying rent, you also have the opportunity to explore other options that will help increase your savings. You can recreate old garments to make tote bags, hats or purses. Sell old books online, make art you can sell to friends for a reasonable price, and use all this time to hone skills you've always wanted to focus on. One day, you can use them to make your money grow in the comforts of your own home.
Of course, simply saving up won't cut it if you're not making enough money in the first place. One way to get started with being financially independent is to find another job you can manage, so you have more sources of income. Lucky for us, a lot of employers now offer remote work and freelance opportunities, so you can easily find jobs on the side. This will require time management and your drive to stay focused. Remember, the goal is to save enough money to finally be able to make it on your own.
You can use all this time of restricted travels to find more jobs instead, and save up more money. You'll end up winning as, in the end, you would have accumulated enough work experiences — possibly even more than your peers! You can then add more value to future employers and ask them for a better pay. This then solves your problems of being underpaid! When in doubt, there are lots of free knowledge online you can use to sharpen your skills. The only limit is your determination.
Eventually, when you feel like you’re able to stand on your own two feet and are not just trying to survive, you can already plan the next steps to move of your parents’ home. When it gets tough, remember that there is not one formula to adulting: it’s all up to you.
Imposing an age to move out of the nest can be impractical for some. Instead, we can teach kids to be more independent early on and learn how to start saving, so they grow to be independent, financially smart adults.
Whether it’s for your first home or for retirement, it’s always best to start saving early! Choose the right KiwiSaver plan for you, right here at glimp!
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