College graduation is quickly approaching, leaving many new graduates hopeful for their future. Many have plans of moving out, building careers, and starting families. This is a time in their lives when they have more dreams than resources and must reconcile their aspirations with their finances. A great number of these graduates do not plan on moving back home, but instead would like to find a place of their own. However, the long-term goal of homeownership seems daunting, with no clear place to start. The question isn’t always whether to rent or buy a home, but also how to use the two in tandem to achieve your personal goal. One common option is to rent an apartment with a roommate. This requires a relinquishment of privacy but can be an effective way to reduce the cost of housing. The average cost of rent in the United States is $1,794, according to The New York Times. Split with a roommate over five years, this can save $53,820. These savings can go toward expenses such as student loan debt or toward a down payment on a house. Another unpopular option is to converse with your parents about temporarily moving back in with them. Although it’s not the most appealing option, it might be the most cost-effective option as you prepare to pay off student loans, save for a down payment or save for other long-term goals.

Some college students might have saved for a down payment on a house throughout college. Therefore, if you already have money to put down on a house, you could choose to purchase a smaller home as a steppingstone toward one that more closely aligns with your long-term goals. Purchasing a smaller home, more commonly known as a ‘starter home’, gives you the option to build equity in a home while not having as high of a mortgage payment on your dream home. At the end of the day, there is no right or wrong answer when it comes to housing. That’s why it is important to make financial decisions that build toward your goals.

Entering the “real world” is a stressful time for any young adult, as many have big plans for life. It is important to live within your means and not rush to the next financial milestone. Doing so avoids debt, which can be one of the biggest distractions from reaching your financial goals. As Ralph Waldo Emerson said, “Life is a journey, not a destination.” God has a wonderful journey planned for you, so sit back and enjoy the ride!

Citations

Goodreads. (n.d.). A quote by Ralph Waldo Emerson. Goodreads. Retrieved April 13, 2023, from https://www.goodreads.com/quotes/24142-life-is-a-journey-not-a-destination

Kodé, A. (2023, January 25). The typical American renter is now rent-burdened, a report says. The New York Times. Retrieved April 13, 2023, from https://www.nytimes.com/2023/01/25/realestate/rent-burdened-american-households.html#:~:text=The%20rent%2Dto%2Dincome%20ratio,from%2025.7%20percent%20in%202020.