Well I think there is one thing that you can do which will make more of a difference than almost anything else and it is incredibly easy to do. So what is this wonder solution? It's really simple:
Stay at home for as long as you can...
Staying at home for longer is the best single financial decision that you can make when you are starting out on your wealth building path. There are many reasons for this including
1. You avoid the high costs of rent
Rent is a massive expense and even if you share can really eat into the amount of money that you can save. Now I'm not advocating mooching off your parents. Pay them some sort of rent every month if they will take it or contribute to the household expenses however I can guarantee you that the amount you pay to your parents will not even come close to the amount that you spend living on your own.
Want some actual numbers? Here goes...I lived with my parents for 4 years after starting work. I paid them ~$700 a month to contribute towards the household bills and expenses. I now live out of home. I pay $1300 a month in rent alone and another couple of hundred of dollars a month on food and utilities.
2. You can share almost every bill
Most people share when they first move out of home and this makes a great deal of sense. You can split the bills like if you were living with your family (but lets be honest you always get a better deal with you parents). However when you live with others there are things which are "your" bills and things which are "their" bills - the most common examples relate to food bills which are almost never split.
When you live with your family you can split almost every bill with them. Shared food and shared everything is almost a given.
3. Any savings can and should be INVESTED for the long term
The way you get ahead by staying at home is by investing as much of your income as you can. Invest it in savings accounts or in shares if you are interested in the share market. You have so much more free cash than if you live at home that it is easy to do this.
The idea is not to spend more on going out or going on holidays than you would if you lived out of home . It is using the money you have saved to start getting ahead financially.
4. Allow the power of COMPOUNDING to work it's magic
Compounding is an amazing phenomenon. Putting away money today is much better than saving the same amount of money in 5 years time. If you can stay at home for a few extra years and really save some money and invest it you can then move out of home, have higher expenses but also have a nest egg which will continue to build because you have had it working for you for a while.
I did this and I can't tell you how much easier it was to save for a house deposit when I was living at home compared to now that I am living out of home and have much more of my income going to basic living expenses.
I really do think that living at home is the best way to get ahead financially. Do you agree? Do you think that it helps or hinders young people? I would love to hear your views.
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