Now that you have been able to convince your parents to let you stay in an alien city, it is time you take the responsibility and get smart with your money matters.

You are probably among the many young people who have left their parents' home in pursuit of a career, a better pay cheque, power, fame or simply to find yourself. As easy as it may sound, living alone has a lot more responsibilities than you can think of.

Tasks like house hunting, paying rent on time, managing daily expenses, watching movies, traveling to work, spending on food and after all this sending some money back home can take a toll on your finances.

But now if you have been able to convince your parents to let you stay in an alien city, its time you take the responsibility and start taking care of your money.

According to Financial Planner Bijal Bakhai, "Living alone is no different than living with your family. Your financial planning will be same as it was with your family, except the fact that you have to take the entire responsibility yourself."

Moneycontrol spoke to experts who recommend a process of backward calculation. It is only after spending money for living expenses, investment and savings, should you think of buying those fancy gizmos and mobile phones. So first, allocate money for the must-dos and then spend whatever you are left with.

Here is a list of the must-dos and how much you must ideally allocate to them.

Living expenses

Rent

In a new city, it may be very difficult to find an affordable place to live in. Mostly, people either live as paying guests or rent an apartment.

"However, make sure that not more than 20-25% of your salary is spent towards rent of the house," says Bakhai.

Try and share your house with a few more people so that the monthly rent can also be shared. You also have an option of staying as a paying guest. Here you may not have to pay deposit and the monthly rent is also less.

Other expenses

You would need to set aside at least 20-25% for your daily expenditure like food, traveling, entertainment and so on. Most of us spend our money on little things, which we do not remember. Try to get a grip on your expenses, which may help you to be left with a good amount at the end of the month.

Savings and investments

Where the money goes?	Allocation
Rent	20-25%
Food, travel and other must-spends for living	20-25%
Savings and investments	20-25%
Auto loan	5-10%
Emergency	5-10%
Miscellaneous spending	5-10%

After all that you have spent for necessities, you need to try hard and save some amount at the end of the month.

"Although, savings may differ from person to person, you may try and at least save 20-25% of your income," says Financial Planner Mukesh Vora. You can then use these savings in various ways like for buying a home or sending it back home.

Like most of the experts say, you must start investing from the day you start earning; it is time that you take this seriously.

Mediclaim and emergency corpus

Living alone in a city with a very limited financial support system, it is always advisable to have a reasonable part of your income for emergencies. This should not be clubbed with your savings.

Says Bakhai, "A minimum of Rs 1 lakh should be kept aside safely. You can either have it as cash in hand or may be a credit card with a larger limit. Also, the most important is personal accident and mediclaim policy. While living alone, a lot of precaution should be taken in terms of medical contingency," advises Bakhai. You can start by setting aside 5-10% of your monthly salary to build this emergency corpus.

Auto loan

Now that you are living alone, you may surely feel the need to buy yourself a vehicle that may make your life easier. But are you financially prepared? A lot of you must firstly decide if you really require a vehicle.

"We all may like to assume that buying a vehicle is a one time investment but do not forget the recurring cost that you may have to spend on daily basis. However, if you intend taking a loan, not more than 5-10% of your income should be paid as EMI," says Vora.

It is best to travel by public transport since that is very economical for a person living alone. But if you are still keen on buying a vehicle, it would be better to go in for a two-wheeler rather than a four-wheeler.

To make money management easier, you should keep your savings, investment and living expenses aside in the beginning of the month and plan out your budget with rest of the money. Penning down all your expenses will help you to know and get a grip on the various miscellaneous expenses.

Once you have a good grip on your finances, you may be left with a lot of money after allocating for the above. That money can help you fulfil some fantasies like buying that i-pod or the latest mobile phone. For instance, by cutting down on some daily travel expenses, you could bring down that allocation from 20-25% to 15-20%. That will give you an extra 5% to buy what you like.

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