After university, many graduates will find themselves heading back to their parents’ home or thinking about moving out to their own place. For many the option of buying a house often comes much later, with the average age of having a first home now standing at 33. The area of managing finances for renting and buying is another that graduates need more help with.
While saving for a home, which you can find some advice for in my previous post about Lifetime ISAs, you may decide to rent somewhere for a bit. Renting can seem like you’re just throwing money away but it can be a good option for many reasons such as work or better enjoyment of life.
Overall there are lots of things to consider when deciding if renting is the best option for your situation. One of the biggest thing is working out just how much money it could cost you to rent a place of your own on top of your typical finances such as food and entertainment.
So what could your outgoings consist of? Here are a few things to make note of when renting as a graduate that could assist your decision – as there are some extra expenses compared to when living at uni with friends!
The amount you pay for rent can vary depending on a lot of factors, for example, whether you choose to live by yourself or with others and where you are looking. Your basic rent will be the most expensive outgoing payment but it is definitely not the only one.
You may also have to pay a deposit and one month’s rent upfront too, so make sure you consider this when first moving out.
As well as paying to live in an actual space, you will need to pay council tax too for the area you choose. A few groups are exempt from this or pay less, such as students or those living alone.
The average monthly payments for council tax in the UK is £117. So make sure you look at the local council’s tax bands, which you can do here, before you move into a new place as they can differ depending on where you are. You could also consider living with other graduates to help you out with the costs.
When you rent or own a property, you’ll be required to set up and make payments for the amount of water you use. On average, this will cost you £34.58 a month according to Money Advice Service.
Electricity and Gas
Likewise, you’ll also be charged for the amount of electricity (including heating if you don’t have gas) that you use.
If you use gas then you’ll have to take this into consideration too.
A necessity for most these days – WiFi. But also just another expense that you should think about before renting.
According to Cable.com, the average price of internet in the UK is £30.30. Work out whether you’ll be needing unlimited usage and what speeds you want, as this can make the prices fluctuate too.
Adding another payment to your monthly/yearly outgoings is the cost of watching TV. The yearly price for this is £154.50, but you can pay this amount monthly to spread the cost.
At a small cost, this is definitely worth getting just to make sure you’re covered in your new place if something were to happen. There are lots of different types of insurance on offer for various prices, so this one really is just working out what’s best for you.
On the whole, there are probably lots of great reasons why renting could work for you but it’s important to figure out if it’s worth the cost. Sometimes it can be better to hold on living with your parents for a bit longer to get some more money in your savings.
Have you moved out after university? What have you found to be the most annoying expense? Leave a comment below to help other graduates!