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By Keketso Matlebyane and Khayalakhe Ndlovu
The decision to move out of your family home is an exciting one. However, in the midst of all the anticipation of "living by your own rules", it is important that you plan your "independence" carefully. Your newfound "freedom" will come with great financial responsibilities. Being equipped with information can help mitigate some of the upcoming financial challenges. Having access to the correct information as well as having a plan will assist you with the financial planning required to move into this next life stage. Here are some things to consider before leaving the nest:
1. Can I afford this decision?
It is important to be realistic about the state of your finances. Have a look at your income and set-up your budget whilst taking into consideration your upcoming expenses. These could include, but is not limited to, the estimated rental, levy, utilities and transport costs. Not forgetting that you will now probably have to do your own laundry and buy your own groceries. A good idea to implement in order to measure your financial readiness to live alone is to pay "rent" to your parents for a few months before your move. This will help you determine whether this is the best choice for you. Also, your landlord may want to check your credit score to see how you have managed credit in the past. If you have not managed credit well then this may count against when you apply to rent.
2. Save First!
It is important to save as much money as you can while you're still living at home. Moving into your own place requires you to pay a lot of fees upfront. These can include your lease application, the deposit plus a month for rent as well as administrative costs related to your utilities such as water and electricity.
3. Look at the fine print
When you are provided the lease agreement, look into the finer details. Some landlords may increase your rent before 12 months which can be a nasty shock if you have not budgeted for it. Try to find a place where your rent is unchanged for the first year. You can also negotiate with the landlord. Make sure you understand the stipulated penalty clauses if you want to move out before the end of the contract period.
Try to find a place that has minimal utilities fees and has included amenity fees within your overall rent (such as the levy). It is always best that you have someone with experience to revise your lease for you; this can help you avoid signing lease agreements which are not in your best interests.
4. Collect your household goods and store them at home
Avoid making big purchases when you are already out of your home, rather save and buy things ahead of time and place them in storage until you move out. This method allows you to recognise what is missing before it becomes an issue when you're on your own. It also limits the chances of you taking things on credit. Buying appliances on credit is not ideal; cash is king and allows you to negotiate prices, unlike the cost of the instalments where you end up paying double the amount of the actual selling price! As an alternative, second-hand shops can provide you with your household goods at a cheaper price, this is worth looking into.
5. Budgeting – do I need this?
Budgeting requires you to make a list of your income and all your expenses on a monthly basis; this should be completed keeping in mind that your expenses should not exceed your income. Having an effective budget provides you the opportunity to take control over your finances and make informed decisions regarding your move. For instance, it is not wise to move out if all your expenses leave you without any extra money. Ensure that the cost of moving out does not overburden you financially and that you are still able to save a bit of cash after paying all the expenses such as rent, household insurance, groceries and electricity to name a few. It is important to have extra money for unforeseen emergencies as well.
6. Lifestyle changes
Taking on the responsibilities associated with moving out will more than likely change how you socialise with your friends when you stayed at home. With less cash to splash, you will have to adapt your budget to your new expenses as overspending may well cost you the roof over your head. For example, going out and using funds which are reserved to pay for your electricity might seem like a yolo moment but you won't be happy when your electricity goes out and you still have three weeks before you see your next income.
7. Don't rush this process and always ask for help
Wait until you have saved enough to afford to move out. This step shouldn't be influenced by external factors such as peer pressure or arguments with your parents. Moving out prematurely could have serious financial consequences and you might end up moving back home with a heap of debt. Let moving out be an informed decision taken by your state of financial and emotional readiness.