Your first-time renting is often your first true chance at financial independence. You might be excited or scared about what’s ahead — probably both. Chances are you’ll be moving from your parents’ house into your own place, meaning you’re about to discover a new appreciation for all the things your mum and dad were looking after.
Of course, getting your own place comes with a whole host of new financial responsibilities, so you’re going to need to make some changes to your current financial set up. Here are three smart moves to help you transition smoothly into rented life.
Re-establish your budget
You might have been paying a bit of board money at home, but that’s probably a fraction of what you’ll be paying in rent and bills each month. Thus, it makes sense to go back to the drawing board on your budget to make sure you’re financially sound for the big move.
The biggest thing will be to reassess your income and outgoings, particularly the latter. You’ll need to consider rent and bill costs as well as estimates on groceries and other day-to- day expenses. Once you’ve figured out your new monthly expenditure, you can see how it will stack up to your current income. Your costs should not surpass your income — if they do, you’ll need to make some changes in order to live within your means.
Adjust your spending habits accordingly
So, you’ve run the numbers and are looking to not surpass zero come the end of the month – maybe even have a little bit of cash left over. If you haven’t done it before, the best way to do this is analyse your spending habits and identify areas to cut back on or even eliminate from your outgoings.
Take a month or two to log every aspect of your spending – what money is going where, when and why. Take everything into account, from your regular direct debits through to buying a can of coke at the shop. Once you have a month overview, you should be easily able to spot areas of frivolous or unnecessary spending that you can adjust. Examples include:
- Taking a packed lunch to work instead of buying one
- Cancelling any unwanted or unneeded subscriptions
- Eliminating the morning coffee run from your routine
- Taking a day to consider impulse buys
Look into cheaper alternatives to your current suppliers as well. You might be able to find cheaper utility packages, less expensive broadband or a better supermarket. If you make an effort to consciously change, you could find yourself with hundreds of pounds in savings in just one month.
Create an emergency fund
Life is full of surprises — some more unpleasant than others. In fact, life has a nasty habit of throwing hurdles your way when you least need them – hurdles that often involve money. Now you’re out on your own, you need to be ready to deal with any bumps in the road – to expect the unexpected, if you like.
Saving money is tough but, if you can afford to put anything aside, it’s a great habit to get into. You might want to get a house deposit fund going or start saving for a car, but it’s also worth having backup money in case of an emergency. Emergency spends – like urgent car repairs or unexpected bills – are no fun, but they’re much less fun if you’re not prepared for them. Create a fund, and at least you’re protected in case the worst happens.
It’s worth saying that renting isn’t all doom and gloom; your first time as a financially independent human being should be exciting as it presents a lot of wonderful opportunities to live life on your terms. It is, however, worth remembering to be sensible with your cash, then you can focus on having fun in your new place rather than fretting over money.
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