Exit Strategies for Young People Forced Home During COVID-19
It’s no secret that the pandemic has wreaked havoc on American financial lives, and young people are among the hardest hit. For the first time since the Great Depression, most young people between the ages of 18 and 29 are living at home with their parents, according to a new Pew Research study .
While there is nothing in theory wrong with additional quality time, you may want to improve your finances and eventually move out of your parental home, which may require some planning.
“Now is not the time to just wait and see,” says Bobby Rebell , Certified Financial Planner and Personal Finance Specialist at Tally . Here are a few ways to create a financial plan and exit strategy.
Estimate your income
If your hours are down or your opportunities are down, this may be the perfect time to work on other sources of income. There may be other ways to make money – like online tutoring – until the job market in your area improves.
Rebell says that if you haven’t found a job in your specialty in the past six months, you can also try new things or redefine your skills. You may decide to improve your skills in order to move completely into a new field.
Increase your savings
If your parents don’t ask you to pay for living expenses, you may be able to accumulate your savings. Before you move, save enough money for your rental bond, moving costs, and a small emergency fund. If you are planning to move to a new city or state, start researching the average cost of living in the area and come up with your own approximate budget, including all of your expenses (rent, student loans, groceries, etc.)
Work to improve your credit score
If your credit score isn’t perfect, now is a great time to improve. “In this uncertainty, more and more homeowners want tenants to have a good to excellent credit rating,” says Rebell.
For the biggest improvements, focus on making payments on time (35% of your rating) and reducing your credit card balances (30% of your rating). There’s a complete break in all five factors that affect your credit score here . You should also check all three credit reports — EQUIFAX, Experian, and TransUnion — for errors that can damage your credit score. If you notice anything, you can contact each bureau directly. (You can access your credit reports for free once a week .)
Think carefully about your move
Finding an apartment that suits your needs and budget can take a while, so be patient when searching. Try moving to less popular times – like winter – to save on moving costs and rent.
You can also negotiate a lease by agreeing to live somewhere longer than average. “Landlords don’t make money if the apartment is empty, so they are more likely to agree to lower rent in exchange for longer rent,” says Rebell.