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How to afford moving out as a student or young adult
Author: Sandy Yong
Source: MoneySense
Whether you’re a graduating student or are just starting your career, moving out of your parents’ house is a significant milestone. But with rising rents and increased costs of living, there are various financial aspects to consider before you make this big decision. Here’s a 10-step plan to help you assess if the time is right for you to break out on your own—without breaking the bank.
Ask yourself: Why move out now?
Before you start packing boxes, ask yourself why you want to move out. Perhaps you have an appetite to become more self-sufficient and learn to cook your own meals. Or maybe you’re tired of being interrupted by your parents when you have friends over and would prefer more privacy. If you’re from a small town, you might want to experience life in a big city.
Depending on your reasons for moving out, you may have to build extra money into your post-move budget. After all, if you’re hoping to go out more and enjoy the nightlife, that won’t be possible if you’re spending all your disposable income on rent.
Finally, if you just got into an argument with your parents and are feeling emotional, it may not be the best time to make any decisions about leaving home just yet. Give yourself a few days to look at the entire situation (finances included) and not just your emotions.
How to tell your parents you’re moving out
Once you’re completely sure you want to move out, give your parents a heads-up about your plans. Present them with a well-thought-out plan; one that includes your expectations, like how much it will cost and how you will be able to afford living on your own. Also ask for their input and advice. If you’re living in a dorm and looking to move off-campus, your parents may also be able to help you search for a new place. After all, this can be an emotional experience not only for you but for your family. So you’ll want to give them time to adjust to the idea of not having you at home.
How much should you save up to live on your own?
Unless your parents agree to foot the bill, it’s essential that you have a stable income to support yourself. Nothing’s worse than having irregular paycheques and worrying whether you can pay next month’s rent on time. A landlord is more likely to accept your rental application if they see that you aren’t spending more than 25% to 35% of your income on rent. Once you figure out how much you can earn, then you know how much you can afford. The common costs to factor in are:
- Utilities
- Internet
- Food
- Transportation
- Tenant insurance
- Furniture (unless it’s a furnished apartment)
- Appliances (if not included)
- Entertainment
- Subscriptions
- Clothing
- Other expenses you have (keep a diary and/or budget to keep on track)
If you own or will need to buy a car, also allocate money towards auto insurance, parking, gas and maintenance fees, which can add up quickly.
And don’t forget one-time moving costs, which can include hiring a moving company, renting a truck or paying for a storage unit. Also, if you don’t already have one, setting up an emergency fund (with three to six months’ worth of expenses) is advisable. Unexpected expenses may come up while you’re settling into your new residence.
Why establishing good credit matters
Many landlords will check your credit history to see if you’ve had financial troubles in the past. So, well before you put in a rental application, request a copy of your credit report from one of Canada’s credit reporting agencies, Equifax or TransUnion. That way, you can make sure the report doesn’t contain any errors and you’ll find out what your credit score is.
Even if you’ve never had financial issues, you might be surprised to learn you have a poor credit score due to a lack of credit history. If that’s the case, you can start establishing good credit by getting a credit card and always paying your bills on time.
Now, decide on your living situation
If you find you come up short after crunching the numbers, you may need a roommate (or two!) to help divvy up the costs. While sharing a place with roommates may not be the scenario you imagined for your adult self (especially if you want more privacy), at least you’ll be in good company.
Reflect on the type of roommate you might get along with and whether your lifestyles will align. Hopefully, you’ll find someone who is responsible, tidy and—most importantly—who pays their rent on time.
Search for your new home
Between the research and property viewings, it takes a lot of time to find a suitable home. Start by choosing a location. Do you want to be close to your family, or your workplace? Perhaps you prefer a neighbourhood that is either walking friendly, has public transportation, or access to highways if you are driving. You may also want nearby amenities and services such as a bank, doctor’s office, and gym. Properties in urban centres tend to be pricer than those in the suburbs.
So, if you’re willing to live farther away from the downtown area, it could save you hundreds of dollars per month on rent. (In that case, however, don’t forget to calculate any added expenses that come with a lengthier commute, if applicable.)
Then, based on your budget, you can narrow down your search to the type of property that you can afford, such as an apartment, condo or one floor of a house.
Read the fine print
Before you sign on the dotted line of your rental agreement, you need to read it carefully to understand what you can and cannot do as a tenant. Are you allowed to sublease? Can you paint the walls? Are there rules about having pets? These are things you’ll want to know in advance to make sure it’s the right fit for you (and your roomies).
Protect your belongings
Another important item that many renters overlook is tenant insurance, which can help to cover the cost of your belongings if they’re stolen or damaged. A fire or flood could destroy everything you own, and without coverage you’d be hard pressed to replace all your furniture, clothing and household items—let alone any precious artwork, instruments or other valuables.
Make it feel like home
Here’s the fun part: Creating the atmosphere you want to come home to. Green plants not only clean the air but also give a more natural feel. Adding artwork and photo frames can create visual interest, while a nice rug or even simple throw pillows can make a room feel comfy and cozy.
If you’re not picky about buying new, you can find gently used and discounted items from numerous sources including Facebook Marketplace, Craigslist, Kijiji and your local thrift store. If you’re lucky, you may even receive hand-me-downs from friends and family or find free stuff that your neighbours are giving away. Don’t forget to peruse garage sales in your area, as you may find a great bargain.
Once you’ve settled into your new home, make time to explore your neighbourhood and meet new people. After all the hard work you put in, you can now look forward to creating new memories.
This article was written by Sandy Yong from MoneySense and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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