- Date : 23/12/2019
- Read: 5 mins
Moving out of your parents' home marks a new phase of your life and calls for some big decisions. Here’s what you need to consider, financially speaking.
So you’ve graduated, landed a job, and are considering moving out of the family home and starting out on your own. Congratulations on approaching yet another milestone! You would no doubt have thought things over carefully before taking this big step that affects multiple aspects of your life. But before you fly the coop, there are some key money-related questions you’ll need to ask yourself.
EXPENSES TO CONSIDER
Are you aware of all the bills and expenses you’ll incur?
This is the most basic question, which you would probably have already considered. But dig a little deeper; make a list of all the utility bills and calculate the approximate monthly expenses. You can check out your parent’s home and ask them to help you with this. Electricity, internet, groceries, parking, etc. are some recurring expenses you’ll incur.
Do you have enough money to cover the deposit and rent?
Renting a place isn’t as straightforward as just paying the rent; there are other expenses to consider. You’ll need to put up a deposit, for one thing. This can be anything between 3 and 10 months’ rent, depending on the city or neighbourhood, and also your landlord. Then, if you find your home through a middleman (broker), you’ll have to pay their commission. You’ll also need money to set up internet, cable TV, etc.
Related: 5 Women-specific financial products you must take advantage of today
Have you accounted for furniture and other necessities?
Functional furniture (bed, cupboard, table, chairs, couch) is something you can’t do without. Appliances such as AC, washing machine, microwave, and refrigerator are also necessities. So, when you’re house-hunting, look for a fully furnished apartment. It won’t just be convenient; it will also save you money. Besides furniture and appliances, there are certain home necessities so basic that you might overlook them. This includes cutlery and crockery, dustbins, soft furnishings like bedsheets and curtains, and cleaning products.
Have you built an emergency fund?
Moving out without having a sufficient emergency fund can be unwise. While you can fall back on your parents in times of need, being financially independent is at the very core of moving out. You should have enough money in your emergency fund to cover your expenses for 3-6 months. Whether it’s a faulty appliance that needs repair or an unfortunate lay-off from your job, your emergency will come to your rescue. When you’re living on your own, you have to be prepared for the worst. Remember that bills will keep piling up, no matter what.
TAKE A REALITY-CHECK
Can you afford your existing lifestyle without support?
When living with the folks, we often fail to realise how much of our expenses is covered by them. Think about it: can you still afford the premium herbal tea every night, or keep the air conditioner on throughout summer? Would you have to give up certain things that are a part of your life now but might seem like luxuries when you move out? If the answer is yes, that’s completely normal when you’re just starting out on your own. But here’s the next question you have to ask yourself and – really ponder over: is it something you’re okay with?
Can you live with a flatmate?
Sharing an apartment with someone makes financial sense, especially if the area you want to live in is expensive. But you also have to consider if living with a stranger and adjusting with them is something you are up for. Even if it’s someone you know (say, a friend’s friend) it may still be tricky. After all, hobnobbing with someone at a party is not the same thing as living with them. But if you take time to find a suitable flatmate and have an honest conversation with them about your expectations and agree to set some boundaries, it can be a great option.
Related: How financial literacy can empower women to develop a financial identity
Are you okay with cooking every day?
When living with parents, healthy and delicious home-cooked meals are taken for granted. But what do you do when you are by yourself? Eating out daily may seem tempting at first, but it’s not a viable option in the long run for either your health or your wallet. You have to ask yourself if you are willing to cook and can find the time to do so every day. Other options you can consider are hiring a cook or opting for a home-cooked meal delivery service.
Do you have any debts?
If you have a significant amount of debt, whether it’s your education loan or EMIs on a vehicle, you may want to consider living with your parents for a little longer while you finish paying off your debt. Alternatively, you can focus on financial planning to figure out a way to accommodate all your new expenses along with your debt. Your credit score might be a good indication of your ability to plan your finances and stick to a budget.
Are you planning to study further?
If you plan to pursue (say) a postgraduate degree, you may want to consider the financial implications of the same when you’re not living with your parents. Any full-time degree would require you to quit your job, but you would still have fixed expenses – such as your rent and utility bills – every month. If you aren’t immediately going for higher studies, you can plan financially to save up for it or discuss the future with your parents.
You may not be able to answer all of these questions in one go, but that’s all right. Take your time, discuss the matter with your parents, get tips from friends who live on their own, and undertake some financial planning. Above all, don’t let any of this intimidate you. Nobody can have all the answers; you’ll figure things when you actually move out. As long as your financial base is strong and you’re clear about your reasons for moving out, you’ll be fine. For further clarity on how to navigate your expenses, take a look at these financial tips that will help young women earners like you to plan your finance once you move out.
So you’ve graduated, landed a job, and are considering moving out of the family home and starting out on your own. Congratulations on approaching yet another milestone! You would no doubt have thought things over carefully before taking this big step that affects multiple aspects of your life. But before you fly the coop, there are some key money-related questions you’ll need to ask yourself.
EXPENSES TO CONSIDER
Are you aware of all the bills and expenses you’ll incur?
This is the most basic question, which you would probably have already considered. But dig a little deeper; make a list of all the utility bills and calculate the approximate monthly expenses. You can check out your parent’s home and ask them to help you with this. Electricity, internet, groceries, parking, etc. are some recurring expenses you’ll incur.
Do you have enough money to cover the deposit and rent?
Renting a place isn’t as straightforward as just paying the rent; there are other expenses to consider. You’ll need to put up a deposit, for one thing. This can be anything between 3 and 10 months’ rent, depending on the city or neighbourhood, and also your landlord. Then, if you find your home through a middleman (broker), you’ll have to pay their commission. You’ll also need money to set up internet, cable TV, etc.
Related: 5 Women-specific financial products you must take advantage of today
Have you accounted for furniture and other necessities?
Functional furniture (bed, cupboard, table, chairs, couch) is something you can’t do without. Appliances such as AC, washing machine, microwave, and refrigerator are also necessities. So, when you’re house-hunting, look for a fully furnished apartment. It won’t just be convenient; it will also save you money. Besides furniture and appliances, there are certain home necessities so basic that you might overlook them. This includes cutlery and crockery, dustbins, soft furnishings like bedsheets and curtains, and cleaning products.
Have you built an emergency fund?
Moving out without having a sufficient emergency fund can be unwise. While you can fall back on your parents in times of need, being financially independent is at the very core of moving out. You should have enough money in your emergency fund to cover your expenses for 3-6 months. Whether it’s a faulty appliance that needs repair or an unfortunate lay-off from your job, your emergency will come to your rescue. When you’re living on your own, you have to be prepared for the worst. Remember that bills will keep piling up, no matter what.
TAKE A REALITY-CHECK
Can you afford your existing lifestyle without support?
When living with the folks, we often fail to realise how much of our expenses is covered by them. Think about it: can you still afford the premium herbal tea every night, or keep the air conditioner on throughout summer? Would you have to give up certain things that are a part of your life now but might seem like luxuries when you move out? If the answer is yes, that’s completely normal when you’re just starting out on your own. But here’s the next question you have to ask yourself and – really ponder over: is it something you’re okay with?
Can you live with a flatmate?
Sharing an apartment with someone makes financial sense, especially if the area you want to live in is expensive. But you also have to consider if living with a stranger and adjusting with them is something you are up for. Even if it’s someone you know (say, a friend’s friend) it may still be tricky. After all, hobnobbing with someone at a party is not the same thing as living with them. But if you take time to find a suitable flatmate and have an honest conversation with them about your expectations and agree to set some boundaries, it can be a great option.
Related: How financial literacy can empower women to develop a financial identity
Are you okay with cooking every day?
When living with parents, healthy and delicious home-cooked meals are taken for granted. But what do you do when you are by yourself? Eating out daily may seem tempting at first, but it’s not a viable option in the long run for either your health or your wallet. You have to ask yourself if you are willing to cook and can find the time to do so every day. Other options you can consider are hiring a cook or opting for a home-cooked meal delivery service.
Do you have any debts?
If you have a significant amount of debt, whether it’s your education loan or EMIs on a vehicle, you may want to consider living with your parents for a little longer while you finish paying off your debt. Alternatively, you can focus on financial planning to figure out a way to accommodate all your new expenses along with your debt. Your credit score might be a good indication of your ability to plan your finances and stick to a budget.
Are you planning to study further?
If you plan to pursue (say) a postgraduate degree, you may want to consider the financial implications of the same when you’re not living with your parents. Any full-time degree would require you to quit your job, but you would still have fixed expenses – such as your rent and utility bills – every month. If you aren’t immediately going for higher studies, you can plan financially to save up for it or discuss the future with your parents.
You may not be able to answer all of these questions in one go, but that’s all right. Take your time, discuss the matter with your parents, get tips from friends who live on their own, and undertake some financial planning. Above all, don’t let any of this intimidate you. Nobody can have all the answers; you’ll figure things when you actually move out. As long as your financial base is strong and you’re clear about your reasons for moving out, you’ll be fine. For further clarity on how to navigate your expenses, take a look at these financial tips that will help young women earners like you to plan your finance once you move out.
