If you’ve never lived away from home it can be tricky to figure out exactly how much money you will need in order to move out. Rent, bills and living costs make up the majority of how much you spend each month. If you haven’t paid these costs before, it’s a good idea to estimate how much income you will need in order to afford them.
The majority of the bills you pay each month will be essential costs, like for housing and council tax, as well as energy and water usage. You need to make sure that you can afford these. Luckily, they are often fixed so you know exactly how much you will pay each month. Other bills you may need to think about include the cost of running a car, if you have one, and personal bills like your mobile phone contract and a gym membership.
Why Do I Need to Think About Bills Before Moving Out?
It’s very important that you only move out if you can afford to. Otherwise, you could find yourself struggling financially and may have to move home. You may even face debt if you can’t pay your bills on time.
To avoid a difficult situation like this, it’s a good idea to estimate how much money you will need to spend on bills each month. Doing this will tell you whether moving out is a good idea or if you should save some money first.
Not everybody has the choice over moving out. Some people are forced into a situation where they need to live on their own, but can’t afford to do so. If this applies to you, there are some charities you can turn to for help. Shelter, Crisis and Centrepoint all offer support for people who are at risk of becoming homeless.
Creating A Budget For Moving Out
Before you make the big move, it’s important to put a budget together to ensure you can fully afford it.
By creating a budget beforehand, you can project roughly how much your expenses will be vs how much you will bring in each month. We recommend using a 50/30/20 budgeting method where 50% of your income goes towards needs, 30% towards wants and 20% towards savings and investments.
This means that the bills we have listed below, should not take up much more than 50% of your income if you want to live comfortably.
You can use our 50/30/20 budgeting google sheet to help visualise your spending and figure out if it’s feasible to move out.
Remember if you are moving in with a partner you can use the 50/30/20 method on your combined income, rather than yours individually.
Let’s take a look at the most popular necessary bills you will have when moving out.
Bills You Need To Pay When Moving Out
The first thing you will need to think about when you move out is your housing costs. You will likely go from not paying rent at home to having to pay monthly rent or a mortgage, if you are buying your own property. Housing costs can vary massively across different parts of the UK.
In order to get an accurate idea of how much you might pay in rent, look at the monthly prices for rooms or flats in your local area. Remember, you will probably also need to put down a deposit on your rental property. The maximum amount your landlord can ask you for is 5 weeks rent.
If you are going to buy your own place, you will need to get a quote for a mortgage in principle. This will tell you how much you can afford to borrow and a rough idea of your monthly repayments.
Whether you rent or buy, you will need to factor in council tax. This is essentially a tax that you pay to the local council in return for living in domestic property. How much your council tax will be each month depends on the value of your property – you can find out the council tax of the house you want to rent by searching for it online.
Council tax may seem expensive, but if you are renting by yourself you are entitled to a single person discount. Some people on a very low or no income are completely exempt from paying council tax. You can check this on your local council’s website.
If you are renting a room in a shared property, the council tax is usually included in your rent because your landlord will pay it each month.
You will need to pay for your water usage. There are two ways that water bills are calculated:
- It is calculated using the local authority’s rental value of your home and factors in things like customer service and admin costs.
- You go on a water meter and pay for how much water you actually use. This is measured by your provider.
If you choose the first method, you typically have a set price for the year that you pay upfront. This can give you the peace of mind that you have already paid for your water and don’t need to factor in the cost of it. If you can’t afford to pay upfront, the water company should let you pay in installments.
For people on a water meter, the bills work slightly differently. The water company measures usage based on how much you use on average, often checking every six months or so. A water meter can either make your bills cheaper if you live by yourself and don’t use much water, or more expensive if you have a large family.
Energy is often the most expensive bill that people have to pay after housing costs. It covers both your gas and electric usage. Sometimes the two are separate bills and sometimes they are combined – you can usually pick what works best for you, depending on what your provider offers. Some old-fashioned properties don’t have gas pipes, but instead use an electric boiler and cooker. You should look into this before committing to living there to see if their energy set up works for you.
Similarly to your water bill, the energy company will either charge you a set amount each month or the cost will vary depending on how much energy you use. The former is called a fixed rate and is calculated based on the average energy consumption of the property over a year. The latter is called a variable rate and fluctuates through the year. Variable rates tend to be more expensive in the winter because that is when people put their heating on.
If you have a TV with access to channels, you will need a TV license in order to watch them. It is important that you abide by this because it is the law and you could face criminal prosecution if you get caught.
However, many young people don’t bother with a TV license these days because they watch all their content on streaming platforms, such as Netflix and Disney Plus. You don’t need a TV license for these. But it is important to note that if you want to stream content from TV channel websites like the BBC and Sky Sports, you do need a TV license.
When you move into your own place you will probably want to get a broadband package in order to use the internet at home. Unless you’re moving into a room in a shared house where rent is inclusive of all bills, it’s likely that you’ll have to set up your own.
There are loads to choose from, which can feel overwhelming. But don’t worry, you can search for the best deals in your area by using comparison sites. Some companies do offers on phone and broadband packages, so it’s worth checking these out if you’re in the market for a new phone contract.
If you don’t already, you’ll probably have to pay your own mobile phone bill when you move out. Some people don’t bother with broadband and just use their phone data instead, but you will probably need a high data allowance if you do this. It’s also worth knowing that mobile phone companies only let you use a certain amount of high-speed data.
If you spend a lot of time streaming, you’ll probably want to get Broadband or you’ll be waiting forever for the video to load!
If you have a car or are planning on getting one, you will need to factor in the costs of running it. These are:
- Car insurance, which you can either pay yearly or monthly.
- Car tax, is a government tax on your vehicle that you usually pay yearly.
- An MOT, is an annual test of your car’s safety that is required by law.
- Car finance, if you don’t buy your car outright.
- A service check, which isn’t required by law, but it is a good idea to get a yearly one anyway.
- Damages to your car can happen at any time and you will need to pay for them outright if you want to keep running your car.
There are two types of housing insurance that you may need to consider. Buildings insurance covers damage to the building structure and is only applicable if you own the property. If you are just renting, your landlord will need to pay the cost of building insurance instead.
As the name suggests, contents insurance covers the contents of your home. You can get contents insurance if you’re renting but if you rent a room in a shared property, you may find it difficult to claim for contents insurance.
As well as the bills we’ve discussed you will also need to think about the cost of essentials that you will need to purchase in order to feed yourself and run your home each month.
These fall under the categories of food, cleaning products and toiletries. You also may want to make sure that you have some money left over for luxuries and fun activities each month, to help you enjoy life.
Whether you can afford to move out depends on if you can pay for the bills and living costs mentioned above. People pay wildly different amounts of money in bills, depending on how careful they are with energy and how big their family is.
You can get estimates for bills for a property that you’re interested in moving into on websites like RightMove and Zoopla. If you can’t comfortably afford these bills, it may be best to defer moving out until you have saved up some money.
Read More From Money Sprout: