Hi Unc,
I recently graduated from college and started my first job as a “professional” with a local company. It feels really good to finally be earning a salary and making enough money to support myself. I am excited about my new career and feel like an actual adult. But now I am also faced with a tough decision.
After graduation, I moved back home with my parents until I could get a job and afford my own place. I also still drive the same car I had in high school. As I look around my office, my coworkers are living in their own apartments, driving new cars, and going on vacations. Now that I have my gainful employment, it seems like it’s time that I join the real world. My dad has urged me to keep living at home until I have been in my job for a longer period of time and my mom agrees with him. My friends think I need to move out so that we can have a place to do what we want, when we want.
I understand my parent’s concerns, but I really feel the need to move on with my life. What do you think?
Confused in Las Vegas.
Dear Confused,
Congratulations on the new job!!! Savor that success. Bask in that joy. You are clearly someone who makes good decisions and has the ability to listen, plan, prepare and succeed. That mindset is invaluable. I want you to keep that mindset as you think through the basis for your question and the various issues to be addressed.
First, do not compare your life to others. You don’t know the true social or economic position of your co-workers. They are presenting an image that represents their best life. In reality, you have no way of knowing their debt load, financial assistance from relatives, or level of stress. Teddy Roosevelt said it best, “Comparison is the thief of joy.” Second, wanting to have your own place is a great thing. Almost every advisor will agree that it is vitally important that all able adults be independent and take responsibility for their financial support and personal well-being. That said, the ways in which people exercise their independence and take responsibility differ greatly. We are beginning to see a significant change in household compositions as the number of multi-generational households are increasing due to emerging economic factors. You have a significant opportunity in hand. A quick search on the internet tells us that to rent your own apartment it is going to cost around $900 – $1,100 per month in Vegas That doesn’t include utilities and internet service which will be at least another $200. By staying at home for one year you have the opportunity to save $13,000 – $15,000 in those two areas alone.
Through this simple exercise in discipline and patience, you will have the ability to establish a savings plan, pay off debt, find an apartment, reasonably upgrade your car and go on a vacation. In just 12 months you will be living the same lifestyle as your colleagues with ease. If that is truly what you want to do. I would urge you at this time in your life to think differently. There is no “wrong” choice for you here as long as you develop a plan first. I recommend that
you start by sitting down and writing out a budget. Make sure that you establish both a spending plan and a savings plan. You also need to consider your career and life goals. What is your life plan over the next three to five years predicated upon your 20-year horizon? Rank your goals in the order of priority. Are you seeking financial independence? Do you want to retire early? With this information in hand, obtain input from a trusted advisor and think through which living arrangement best serves you, your parents, and your future in the context of a more complete strategy.
I will have more to say on these topics so please follow this link to Encouragement Well’s video library where I will be discussing these issues and more over time. Also, go to the Resources Page and Book Page to find links to sources of information regarding financial literacy to assist you in building your plan.
Specifically, I would like for you to read JL Collins’ “The Simple Path to Wealth” and go to his website JLCollinsnh.com. His discussions on the topics of savings, car purchases and home purchases are worth your time.
Good Luck and check back in to let me know how you are doing.
All the Best,
Unc
