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Whether it’s for a new job, to build a nest, or upgrade your surroundings, moving home can be incredibly exciting. Unless you’re buying a property and getting a mortgage, rent will probably be your biggest monthly expense. To get a good idea of how much you can personally afford, it’s worth totting up all ongoing costs – including bills, food and fun – and adding them to a monthly budget.
Although there isn’t a one-size-fits-all number, you should make sure you never spend more on rent than you can afford. Once the rent has been paid every month make sure you have plenty left for other outgoings like utility bills and council tax.
It’s important to consider what you feel comfortable paying. Some renters don’t mind spending a higher percentage of their income on rent if there are enough benefits to the new home, such as a bigger garden or a better school nearby. There may be other little details to consider, like whether you’re saving up for a world cruise, or need to live in a pricier location to be close to your job. It’s therefore a good idea to drill a bit deeper into your budget to see what you’ll be able to afford.
When browsing listings online or gazing into an estate agent’s window, it can be hard to know what’s affordable. After all, you might only have two numbers to work with, your monthly wage and the rental costs shown in the adverts. How are you supposed to know in advance if paying a bit more for French doors, nicer cabinets or a south-facing garden is going to be manageable?
To get a good idea of what rent will work for you, try breaking down your budget into smaller chunks.
1. Putting the rent to one side for the moment, estimate what the total cost of your monthly outgoings will be when you move. This includes utilities, council tax, the cost of commuting and all general living expenses, such as food and drink, clothing, etc. It might also include topping up savings or an emergency fund.
2. Minus these outgoings from your monthly take-home pay (your income after tax).
3. The result is how much you have left for rent.
4. If paying rent would leave you with very little or nothing left over for expenses you can’t always budget for, like a broken boiler or a last-minute holiday, it could be worth eyeing up more affordable rental options. Having a buffer in your budget could help you avoid having to borrow money on credit cards or using an overdraft.
Another benefit of building in a healthy buffer is that there could be costs related to renting that you don’t see coming at the outset – having some extra leeway in your money means you can take these in your stride.
Here are some of the costs associated with renting that you might need to add to your outgoings total.
While it’s not everyone’s idea of a fun night, estimating what your monthly expenses might be after moving in will help you find a dream place you can afford.
Some expenses, such as food and nights out, might stay the same. For these, you can check online bank statements over the past few months to get an average. Barclays Online Banking includes Money Tools that could help you manage your money more effectively. Online servicing also makes it simple to regularly review your purchases. This can help you better understand your spending patterns and see where you might be able to save money.
Some 0% purchase cards lets you make purchases without paying any interest on the balance for a certain length of time. This means you can make a purchase and spread the cost over months or years.
The approval of your application depends on financial circumstances and borrowing history, so do the terms you may be offered. The balance transfer period and interest rates, may differ from those shown.
Here are some standard costs you might need to include in your calculation:
To find out the costs above, try using a property search site that has a running cost tool. This gives you an idea of what you could expect to spend on monthly bills in certain areas. Sometimes the landlord or letting agency may even help you out with this information.
Remember, with monthly outgoings like water, gas and electricity, and council tax, it’s a good idea to set up a direct debit, as this is the best way to ensure you never miss a payment – as long as you make sure you have enough money in your account to make the payments.
Adding up all these costs will let you see how much you can afford to spend on rent, as well as holidays, savings, student loans, special events and your emergency fund.
An emergency fund can be useful to help you get through an unexpected job loss or an illness that stops you from working.
Barclays Budget Planner can help you add up all your monthly expenses and find out how much you’ll have left over.
You’ve budgeted like a pro, calculated your take-home pay and expenses, and grilled the landlord for the costs of bills. You’ve almost got the whole picture, but there could also be a few one-off fees involved in moving into a new rented apartment or house.
Make sure you take all upfront fees into account so you know you have plenty of funds available to cover those one-off costs before you set your move in date.
Rental deposit. This could be the equivalent of 4-8 weeks’ rent. As long as there’s no damage or missed rental payments, you should get this back, but because it’s likely to be hundreds of pounds, it’s a good idea to budget for it in advance.
They say finding the perfect home is all about location, location, location. But making sure you can afford the rent? That’s preparation, preparation, preparation.
Using your household income and living expenses, Barclays’ Budget Planner will help you make sure you can afford those monthly financial commitments, whether that’s paying rent, clearing your credit card balance or making your final car payment.