Deciding to rent is an important life decision. Each stage of the renting process comes with a price tag, whether paying your security bond or paying rent on time.
Practice good money habits before and after you begin living in a new apartment so you can keep your finances in good order.
Before you move in
To start off on the best foot, you should kick your money-saving moves into gear before you’ve even taken the keys to your new rental property. A conscious decision to build up good financial habits prior to your move-in day will ensure your money strategy is ready even before you become a tenant.
Save up for the security (or rental) bond
When you sign a lease on a rental property, you typically pay a bond to your landlord or property manager before you move into the house. This is a payment requested on behalf of the owners from a signing tenant as financial protection in case there’s ever a breach of the lease agreement. Read more about rental bonds here. The cost of the security or rental bond is often an amount equivalent to one month’s rent. Before you sign your lease, be sure that you have enough money set aside for this payment.
Be mindful of application fees
Some landlords will charge an application fee for potential tenants. This fee is designed to cover the landlord’s costs of doing background checks or credit checks – sometimes both. Much like the security bond, each state and territory has different legislation as to what this cost is. If you have questions about this process, contact your local tenancy advice line. These fees are typically refundable, even if you are not approved for a rental property. Be sure to find out exactly how much this fee is before you submit an application.
Budget for man’s best friend
If you are permitted to keep a pet in your rental, a pet bond may be charged. Lessors and agents must lodge the security bond as a single amount. This will need to specify the amount taken as pet bond. The amount you can be charged for a pet bond depends on the type of lease agreement you have. In Western Australia, for example, the pet bond must be no more than $260, unless the weekly rent is more than an amount set by regulation ($1,200 per week as at June 1, 2011). If you don’t already have a pet, it could be wise to assess your finances before you incur the extra cost.
Consider whether you need to spend money on storage
If you’re downsizing from a bigger rental to a smaller one, it can be tempting to put all your awesome belongings into storage for ‘later’. But think about this – most of that stuff, whether it’s books or furniture – will lose value over time. So, sell or donate your stuff instead, it’ll make you some money and you’ll save a lot of cash in the meantime.
Bills, bills and more bills
It’s a good idea to set aside a few dollars each week for bills. That way you won’t be stuck with a big bill you can’t afford. Check your previous bills to give you some idea of what the average cost will be. Make allowances for extra costs, such as heating in winter. Bills can include gas, electricity, phone, internet, water consumption and insurance. Keeping these costs low will save you money at the end of each month. Cutting costs might mean being conscious of your thermostat in winter AND summer. Maybe assess your entertainment needs – seek out alternative services like Netflix, or check out a DVD from the library for free.
Find a good location
If you work at the same place 40 hours a week, it’s probably wise to live close to your job. In some cases, this will drastically reduce the amount of money you spend on gas and car maintenance. So when you’re looking for your next rental property, consider how far it is from the places you regularly visit. Finding an apartment near your usual haunts will also reduce the wear and tear on your car or bike.
Pay your rent on time
Budgeting for your rent should be at the top of your monthly ‘good money habits’ list. It can be tough to maintain good credit if you’re late with the rent. Paying your rent on time will help you to build a solid credit history and develops a pattern of good financial behaviour.
Save up so you can move again!
At some point in your renting experience, your lease will come to an end and you’ll be faced with a decision on what to do next. You might search for your next rental property on rent.com.au, or employ your current real estate agent or landlord to look for other rental properties nearby. Maybe this is an opportunity to upsize, or downsize or try living by yourself instead of with a roommate. Remember – the extra money you save from cutting back on expenses might help you rent an apartment on your own. If you return your rental in good shape, you’re entitled to get your rental bond back.