Before you move into a rented home, you must calculate your monthly budget to determine whether you can afford it.
Paying the rent on time and covering other household bills is essential for maintaining a good relationship with your landlord. Plus, if you're free from financial pressures, you'll enjoy your time in your rental home much more.
Here's how you can budget to ensure you can afford to move into a rental property and always have enough money to pay the rent during your tenancy.
Covering initial rental costs
If you're looking for your first rental property, you'll need to save up to cover up-front costs before moving in. These can include fees for your deposit, including both a holding deposit (up to 1 week's rent) and your standard security deposit (up to fives weeks' rent if total annual rent is less than £50,000) and your first month's rent as many landlords ask for this up-front.
In addition, if you're looking for an unfurnished property, remember you could have a large outlay on furniture and other essentials such as plates, cutlery, bedding, television and many other items. Discuss with the landlord or agent precisely what the property comes with, and then you can draw up a spreadsheet with everything you'll need to buy or source and approximate costs.
Even if you're only moving a relatively short distance or don't have too many things, your removal options are still worth considering, especially if you need to use public transport or rely on a friend or family. AnyVan removals cover the whole of the UK and can quote for full home moves all the way down to single items, with handy functions like the ability to track your driver.
Know your outgoings
You need to work out your outgoings to calculate whether you can afford a property. To do this, you'll have to list your expenses, including how much it will cost to rent the property.
Your outgoings will include your rent payments, gas, electric and water bills, broadband and TV, council tax and contents insurance.
To maintain a good relationship with your landlord, the local council and energy suppliers, you must pay these bills on time.
If, for example, you don't pay your rent on time, you'll not only damage your relationship with your landlord, but you may also harm your credit rating. Not paying council tax can also result in a court summons, and not paying your energy bills can result in vital services being cut off. If you're sharing the property with others and you're worried about sharing costs, the Government's MoneyHelper service can help.
If you're currently in a property and you're worried about being able to meet any of your bills, it's essential to contact your landlord, the local council or your suppliers immediately. This may result in a difficult conversation, but they may be sympathetic to your situation, and alternative payment plans may be arranged.
In addition to the above, there will also be other items you pay for monthly or regularly buy, such as:
- TV licence (if you watch television or live television on a smartphone or laptop)
- Mobile phone costs
- Gym membership
- Dentist and optician costs
- Food and household items
- Credit card or loan repayments
- Entertainment costs
- Transport costs (petrol for a car or train and bus tickets)
You'll soon see where your money goes by writing all of these costs down and noting how much you spend on each. In addition, you may be alarmed by some of the expenses, such as food and clothing, and it may highlight areas where you can cut down on regular indulgences, such as takeaways. By limiting the amount of money you spend on these outgoings, you'll be able to make sure you can afford the essentials such as rent and council tax.
Calculating your income
Once you've calculated what you're spending, you'll be able to work out how much you should have left based on your income.
Your income includes all the money you have coming in, including your wages, benefits (if applicable), loans and any money you make from a side job.
Once you've calculated this, you must subtract your outgoings from your income.
If you end up with a minus number or very close to zero, you can't afford the property you're currently looking at and will have to cut down on your outgoings or find a cheaper property. If you still have money left over, then there's a good chance you can afford the property. But you should always ensure there's a good amount left over in case your financial situation changes during your tenancy.
Getting help with costs
If you're struggling with the costs of renting, then there may be a chance you can get help. If you're unemployed or on a low income, you may be eligible for housing benefits, a jobseeker's allowance or employment and support allowance if you have a disability, so it's well worth considering these options before you rent.
Use a budget calculator
Finally, if you're struggling to work out the maths involved, or need a structured calculator to work out your finances, then it's well worth using MoneyHelper's Budget Planner to help you calculate costs and whether you can afford the property.