If you're reading this, it's probably because the time has come to leave the nest. Moving out on your own for the first time can be a little scary, but it doesn't have to be. You're about to experience real independence and one of life's most exciting rites of passage. So, before you spread your wings for the first time, here are a few things to consider before moving out on your own. With this list in hand, you can eliminate stress to fly the coop with confidence.
1. Your Credit Score
Before you even consider if you can afford to move out, you need to make sure your credit score is in tip-top shape. Almost all landlords and property management companies run a full credit check on you to determine your financial trustworthiness and ability to handle rent payments. So, if your credit score is below 650, you have some credit clean-up to do before you're even eligible to rent. It doesn't matter if you can afford to move out if you don't qualify for a place to live.
Start by settling up any bad debt immediately. That means collections, past due accounts, or judgments. Did you know unpaid speeding or parking tickets show up as a court judgment on your credit file? Make sure you pay up what you owe and that all your credit accounts are up to date.
If you don't have a credit file, you need to start building a history asap. Open a small credit card and put at least one utility account in your name, like your cell phone. Don't max out your cards and make sure you make all your payments on time without fail. The majority of your credit score is based on your payment history and balances owing.
2. Rent Specific Costs
If you have a healthy credit score, the second most important thing to consider is if you can afford the upfront costs of renting. Start scanning rental ads, websites, and newspaper classifieds to get an idea of rental rates in your area. Maybe renting a place to yourself is out of your price range so be open to having roommates. Sharing your space is a great way to save on rent, utilities, apartment furnishings, and overall cost of living. You need to track your total net monthly income and make sure you can afford:
- Damage deposit
- Water, Heat, Hydro
- Utility hook up fees
- Laundry Facilities
- Parking Spot
Make sure you pay attention to listing descriptions or call and ask potential landlords what's included in the rent. Some places cover water but not heat or hydro. Others charge higher rent but include all utilities. Some have in-suite laundry, others don't have anything. That means you need to trek to a laundromat and pay per load.
Then, you need to do some research about the cost of utilities. Ask some friends and family who are already on their own what they're paying per month. You can also call utility companies and ask for estimates based on square footage. If you have a car you need to ask about the parking situation. Is the space included in rent, or do you pay separately? Is street parking available and is it free or do you need a parking pass?
Don't forget about renters insurance. You might think you don't need it but you actually do. The safety of your stuff depends heavily on the behavior of other tenants. Kitchen fires and overflowing bathtubs are common and can damage your suite and everything in it. Shop around for rates and compare policies to find the right protection for you.
3. Budgeting And Financial Independence
There are also other variables to consider beyond rent and utilities. You need to make sure you aren't going to be house poor – which means after you pay rent you can barely afford anything else. Housing is typically your biggest monthly expense. To avoid living paycheque to paycheque once you move out, try to keep your rent 25% or less of your net monthly income.
Moving out on your own isn't just about physical independence, it's about financial independence too. After covering all your expenses from rent, groceries, to your phone bill and everything in between you should still be able to save. If you're young, then saving 10-15% of your income is a good place to start but you'll need to plan ahead to increase your savings rate over time.
This is super important because you never know what the future holds. One unexpected bill or emergency could leave you choosing between rent or groceries. Not having an emergency savings account puts you at risk of getting evicted and trashing your credit file. You'll need to be realistic about your income, expenses, job security, and transportation costs to work from your desired living location.
Are you a student? How will tuition costs affect your bottom line? Will studying impact your ability to work full time? These are tough questions but you need to make sure you are being realistic about the amount of financial responsibility you can handle. Money mishaps have serious, and sometimes long-lasting consequences.
4. Moving Costs
Moving costs can creep up fast so make sure you can afford to get all your stuff from point A to point B. How much stuff you have and how far it's going will determine how much you're going to spend. For a move across town consider U-Haul or Budget Truck Rentals. If you don't have a lot of stuff, ask friends and family to help out with their trucks, SUVs, and cars. You may have to make a few trips but the cost of gas is far less than renting plus insurance.
Pro Tip: Do not opt-in for the insurance pushed by the moving / rental truck company. Going through your own car insurance provider is often cheaper, covers more, and just way easier to deal with in the event something does happen. Knock on wood.
If you have a lot of stuff and you're heading out of town, you'll need to price compare several moving companies. Make sure you read reviews, though, because not all moving companies are created equal.
Consider selling any big heavy items and re-buying second hand at your final destination. If you have a lot of heavy stuff to move, that can quickly jack the price of professional movers. Even if you're moving your own stuff, it frees up space so you can rent a smaller truck and make fewer trips.
Avoid buying moving boxes new. Instead, ask friends on Facebook if they have any laying around. Businesses of all types usually have inventory and supplies delivered in boxes. Ask your local grocery store, favorite restaurant, or even your bank if they have any empty boxes they need to get rid of.
5. Cost of Furnishing
If you're moving out for the first time you likely only have bedroom furniture and not much else. This is where Facebook Marketplace, Kijiji, and Value Village are your best friends. Decorating your own place is exciting and the possibilities are endless but resist the urge to buy things new. Even a trip to Ikea can get expensive.
Sometimes you can score free stuff from friends and family who are upgrading their furniture or decor. They may be happy to give away their stuff for free to avoid the hassle of dealing with tire kickers and no-show buyers. So don't be afraid to ask around. When buying second-hand, take into consideration how far you have to go to get it. Try to stay local to reduce travel costs.
Take a walk through where you're living now and make a list of all the things you use daily. There's nothing worse than moving to a new place, then having to spend money every day because you're missing this, that, or the other thing. Take note of cutlery, cooking utensils, dishes, small appliances etc. These days you can get almost anything you need second-hand for super cheap.
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About The Author: Heidi Unrau
Heidi Unrau is the senior Finance Journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she got her first bank job as an entry-level teller. She moved up the ranks to Credit Analyst, Loans Officer, and now a Personal Finance Writer. In her spare time, you'll find her hiding in the car listening to Freakonomics podcasts, or binge-watching financial crime documentaries with a pint of Häagen-Dazs. When she's not chasing after her two little boys, she's in the hot tub or arguing with her husband over which cash back card to use for date night. She’s addicted to coffee, crypto, and obsessively checking her credit score on Borrowell.
Fun Fact: Heidi has lived in five different provinces across Canada, loves her free Tangerine bank account, and will never cut back on Starbucks. Like ever.
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