Before you make the decision to rent, it’s important to consider some of the basic costs and be realistic about what you can afford.
You might have spotted a new apartment building going up close to the action in your local ‘hood’. So let’s figure out if you can afford it – and that means taking into account more than just the cost of rent and utilities in your budget.
Anyone looking to move up to a new space needs to consider the added costs. This is by no means an exhaustive list, but a quick guide to some of the more common costs you’re likely to encounter when moving from place to place. Each of these costs could be fairly nominal, but they can add up.
At the beginning of your tenancy
- Bond – Usually the bond is a maximum of four (4) weeks rent
- Rent in advance – This is a fee which is usually a maximum of four (4) weeks rent
- Pet bond – This is a fee to cover any costs incurred by damage from your pet during the tenancy. The amount varies state to state and may even include tiered rates for certain types of pets
- Connection fees – Gas, electricity, phone (can vary, depending on the provider)
- Moving – Hiring a truck, ute or trailer to shift your furniture, or a removalist
- Insurance – Contents (which provides you with coverage against fire or theft)
- Furniture – Buying the basics for your new home (e.g. a bed, table and chairs)
- Whitegoods – Buying a fridge, washing machine, microwave, etc
- Household needs – Basic food staples, cooking equipment (crockery, cutlery), cleaning equipment (broom, mop, etc), and bedding.
During your tenancy (ongoing living costs, weekly household costs, etc)
- Rent – Paid weekly, fortnightly or monthly
- Food – Fresh food, plus maintaining staples and cleaning products
- 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
- Pets – Food, vet bills
- Parking – Renting with a car in an urban area can come with its own headaches, and parking spaces are often rationed out to renters. If you’re moving from having two spaces down to one, you will need to budget for offsite parking charges
- Laundry – You might have been accustomed to your parents’ washing machine at home, but now you’re moving to an apartment with a shared washer and dryer. Factor in the cost of washing your clothes at a local laundromat or using the shared facilities in your new digs.
- Transport – Bus fares, car maintenance and petrol costs
- Gym membership – If you made use of the included facilities at your old place, you might need to budget for a monthly gym membership to keep up your routine at your new gym-less apartment
- Debt repayment – Can vary
- Entertainment – Movies, dinners out, drinks with friends
How do I calculate my rental amount?
One way to accurately calculate your rental amount is to determine the daily rate, based on how rent is quoted or paid:
- Weekly – Divide by 7 (eg. $200 per week divided by 7 = $28.57);
- Fornightly – Divide by 14 (eg. $400 per fortnight divided by 14 = $28.57);
- Monthly – Multiply by 12 and divide by 365 ((eg. $869 per calendar month multiplied by 12 (divided by 365) = $28.57)).
Consider creating a budget worksheet
Don’t think of your budget as a restrictive punishment that is forcing you to cut back, but a document that gives you freedom to spend what you need to spend and still meet all your financial goals. This budget plan starts with knowing how much income you make. This will let you work out your outgoing expenses and the comparison figure is how you make a budget.
Are there any other surprise costs you’ve run into as a tenant?