Finding a balance between living independently without sacrificing your finances is a real challenge - something that even those who’ve been renting for years haven’t quite mastered just yet.
Fortunately, there are ways you can move out for the first time and gain that independence you crave without blowing the bank. And it starts with figuring out how much renting a property is going to cost you, and making sure you’re able to afford it.
Renting for the first time: Why you need to budget
One of the biggest mistakes first time renters make when moving out is not creating a budget. This is maybe because when choosing your first rental property, it’s easy to get swept up in the excitement of it all - and forget your budget in the process.
But in order to enjoy your new property, you can’t do this.
It may sound worrying at first, but figuring out your budget for rent can be relatively easy, if you understand both what you can afford, and what you need to do to achieve it. This means looking at what you earn in a month, and setting a portion of your paycheck aside for rent and utilities - with some left over for general expenses. But first, it helps to understand exactly what costs you need to take into consideration when you move out for the first time.
Before you move out for the first time: expenses to consider
Of course, when you’re looking for a property to rent, your attention should first be focused on how much you can afford to pay in monthly rent. While this isn’t the only thing you’ll need to budget, it helps to have an understanding of what monthly cost is realistic before you commit to renting a property.
Typically, landlords will require that your income is 30x the monthly rental rate - for example, if your rent is £500 per month, you’ll need to earn at least £15,000.
However, when it comes to renting your first flat or house, the monthly rental cost is just one of many payments to consider.
If you’re renting, it’s likely you’ll also need to pay bills, and factor in additional rent-related expenses you may have never even considered before, such as:
- Your deposit for rent
In order to rent a flat, you’ll usually need a deposit of up to 5 weeks rent. This can be quite a bit of money, so your deposit should be one of the first things you factor into your budget before your property search.
- Council tax cost
This is the one bill many people forget about - unless you rent a property where the monthly cost is included, you will have to pay council tax. Depending on where you live in the country, this can also become expensive.
- Utility bills
In addition to a monthly council tax cost, you’ll also have to pay for your utilities usage each month - including electricity, gas, and water. Exactly how you pay these bills depends on the type of property you choose; while some monthly rents will include some of these payments, a lot won’t - so be sure to factor this cost into your budget for rent.
Again, much like utility bills, you’ll need to pay for WiFi in your chosen property, unless it’s included in your monthly rent cost. Depending on the connection speed you need, this can also become pricey.
If you’re looking at your expenses and wondering if managing separate bills is going to push you over budget, there are all-inclusive rental options available.
For example, when you rent a room in one of our flatshares at Ocasa, the cost of bills is included in your monthly rent.
This means you won’t get stung by a huge utility bill in colder months, and you don’t have to worry about being penalised for missing a payment. On top of this, all-inclusive rental options make it easier to budget, as you know exactly how much you’re spending in total housing costs each month.
Whether you go down this route or not, there are still other, more general costs you’ll need to consider. Even though you’re looking at renting a property specifically, it helps to have an understanding of what you’re currently spending money on each month, or what you may have to spend in the future, in addition to your housing costs.
This will help you not only figure out if you can afford to rent the property you want, but actually live in it.
Additional expenses to bear in mind
As we’ve mentioned, the cost of your rent and general household expenses are just one part of your overall spending for the month. While it may seem like additional expenses aren’t initially important when looking to move out for the first time - you’ll find yourself in a tricky situation if you don’t consider them at all.
Here’s just some examples of additional expenses to bear in mind in addition to the cost of your rent, and general utilities:
- Shopping for essentials
Chances are, if you’re moving out for the first time, you may have not had to buy your own food, and other essential supplies completely on your own - which means you might not be aware of just how expensive it can be!
Having an understanding of how much you’ll spend on things like food, cleaning supplies and other essentials each will help you figure out if the property you’re hoping to rent is realistic within your budget before you commit to it.
It’s likely you’ll have transport costs to think about - whether it’s travelling to work, education, or for shopping and entertainment. No matter what transportation you use, it’s good to have an idea of roughly how much you’ll spend in a month.
For example, if you catch the bus to and from work everyday, this should be included in your monthly budget. Understanding your transport costs will also help you figure out which is the best area to move into - for example, while rent may be higher closer to a city centre, the cost of travel could be less than living outside of the city.
- Furniture and appliances
Again, this involves looking at the property you’re hoping to rent and figuring out what exactly is included in the cost of the rental. Some properties will come fully furnished, while others won’t.
Since furniture and bigger appliances can be very expensive, it’s best to check if these are included in the cost of any properties you look at: for example, whether or not you have a washing machine. This isn’t a huge issue, but if you don’t have one, see if there is an onsite laundrette - otherwise, you face even more spending in addition to your monthly rent.
- Personal interests
Moving out on your own for the first time is incredibly exciting, which means you’re likely to be eager to explore and enjoy yourself as much as possible. And while this is a necessary part of gaining your independence, it can get expensive very quickly if you aren’t careful.
What interests do you have? If you want to go to the cinema every two weeks, go out for a meal once a week, have the occasional pub night, or even pay for a Netflix subscription - each of these activities should be roughly estimated in relation to your monthly budget.
After all, why rent a property in a new exciting area if you can’t enjoy living in it?
Tip: Cut down where you can! Look at what subscriptions you’re paying for that you aren’t using. Try and cook as many meals at home as possible. Even if it’s just a small lifestyle change, the money you’ll save will have a massive impact.
How to figure out what you can afford
Overall, when trying to move out on a budget, the best way to figure out how to do it is to consider why it is you’re looking to rent for the first time, and what you want to achieve by doing it - then, you can make the necessary changes and small sacrifices to make it a reality.
Budgeting can be intimidating at first, but if you want to move out, it’s an absolute necessity. However, before you start cutting down, make sure you’re actually ready to make the move.
We’re offering a free guide on how to move out successfully for first-time renters - covering everything you need to know about the rental application process, so you can be certain you’re ready for the next stage in your life. Get your copy here.