Five budgeting tips for first time renters
29/05/2017 Kristy Hopkins, Senior Property Portfolio Manager
So you’ve finally decided to join the big wide world of independent living. You’re looking for your first rental home, you’ve scoped out the areas and now you’re ready to find that perfect place to live.
Congratulations! You’re off to a great start – but hold your horses! Have you set yourself a budget?
No? That’s okay. We’ve got five tips to help you on your way.
1. Start by knowing your limit
Setting yourself a budget will help you obtain an affordable home; it’s all about spending within your means.
As a general rule of thumb your rent should not exceed 30% of your take home pay, give or take slightly depending on your lifestyle.
2. Get your bond and first months’ rent ready
People often fall into the trap of not making the allowance for all upfront costs and other everyday expenses that come along with renting a home.
First and foremost you must have your bond and first months’ rent ready to go. Most agencies expect this at the time you sign the contract to secure the premises.
A common misconception among new tenants is that a months’ worth of rent is just their weekly rent multiplied by four. This is incorrect. Most months have 30 or 31 days so rent is calculated on a calendar monthly basis; this is the rental figure is due and payable each month.
How to calculate one months’ rent:
Weekly advertised rent = $400
Weekly rent divided by seven = $57 per day
Daily rent multiplied by 365 = $20,857 per year
Yearly rent divided by 12 = $1,738 per month
If you consider the monthly rent here compared to what you would get if you simply multiplied your weekly rent by four (4 x $400 = $1600), you’d be short $138.
3. Remember your utilities
Let’s face it – you’re going to need water and electricity (and sometimes gas) to live. So don’t get caught out forgetting to account for these expenses.
Some utilities will also require a once off connection fee to be paid and whilst this is not ongoing, it is another cost that you need to have ready to go at the start of your lease.
4. Let’s not forget your peace of mind
One thing tenants often forget about is also one of the most important expenses to consider – insurance.
While it isn’t strictly a necessity, insurance does give you peace of mind and has the potential to save you thousands of dollars should disaster strike (think natural disaster, fire, floods or theft).
Renter’s insurance is generally an annual fee and is well worth considering.
5. Starting from scratch is an expense in itself
Once you’ve thought about all other expenses, it’s worth remembering that you will also encounter costs in the process of moving and making a home for yourself.
Part of this is factoring in any removalists costs, furniture, appliances and linen purchases.
And let’s not forget that you’ll need to eat - so remember stocking the pantry and fridge is going to be a necessity.
Are you now ready to find the rental property of your dreams? Now you’ve got the basics covered, you should be in a good place to find and secure your new home. To get started, why not explore The Hopkins Group’s current listings or contact our property management team today!
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