A Checklist for Leaving Home

It seems to happen so fast: Your baby is now a young adult and ready to move out and begin a new life on their own. Though this change is rarely easy, preparing your child financially will help the transition go more smoothly.

What to plan for

Being independent is one of the most important skills you can help your kids develop. When it’s time for your child to leave home, use this checklist to help make things a little easier on everyone.

• Make a budget. This is crucial to smart financial management, especially when starting out. A budget should cover essentials like rent, loans, groceries, utilities, insurance, car costs, clothing, entertainment, and travel. And, of course, don't forget savings.
   
• Set up an emergency fund. It's important to have a financial cushion—just in case. Discuss the importance of setting aside enough cash to cover at least three months' rent and basic living expenses.
   
• Pay off debt. Pay student loan and credit card balances on time. This not only helps maintain a good credit rating, but also increases financial discipline. When it comes to a credit card bill, paying the balance in full every month saves money on finance charges and late fees.
   
• Open key financial accounts. If your child doesn't already have them, now's the time to establish checking and savings accounts for them—and possibly even an IRA or other first investment account, if he or she is eligible.
   
• Continue, or begin, to save money. Remember, time is one of your child's biggest assets. Even saving just $25 to $50 each month adds up and helps develop a discipline that can pay big dividends in the long term.
   
• Don't forget about insurance. Help your son or daughter shop around for affordable auto and rental insurance policies. If your child is under 26, they can continue to be covered by your health insurance policy.