Living alone can be an invigorating feeling. Being able to do what you like whenever you like, while simultaneously feeling you’ve hit the height of being a fully-fledged adult. No matter how long you’ve lived alone, we’re sure you’ve had some hidden costs that took you by surprise. This could be anything from the water bill to council rates and everything in between that all need to be factored into your budget before you enjoy the benefits of living alone.
Before choosing to live on your own, here are some of the hidden costs to be aware of.
Ongoing costs:
Ongoing costs when you’re living alone are the recurring fees it takes to continue managing your home. Whether you’re renting or paying off a mortgage, several costs need servicing.
Mortgage/rent repayments
Regardless of circumstance, you’ll have to regularly make mortgage or rental repayments. How much you pay will depend on the type of dwelling and area you’re residing in. As a rule, you should aim to be spending no more than 30 per cent of your before-pay tax on this. How frequently you make these repayments is usually flexible, meaning you can schedule your repayments to your payday which can help relieve financial pressure.
If you find yourself living alone and with mortgage repayments of more than 30 per cent of your before-pay tax, we recommend looking into a refinance home loan to reduce your interest rate.
Utilities
Utilities such as water, gas and electricity quite often fluctuate in price, depending on how much you’re using them. For example, if you regularly take long showers, your water bill might be higher than someone’s who only showers briefly. The same is true of those who spend a lot of time on appliances like computer gaming and watching TV – their electricity bill will generally be higher. When choosing gas and electricity providers, it’s important to read the product disclosure statement carefully to make sure it’s the right fit for you.
Internet
Once again, internet bills will vary based on your supplier and the plan you choose. If you’re someone who uses the internet frequently for things like streaming services, gaming and even working from home, you probably require a higher plan than someone who minimally uses the internet. Although it will be cheaper to pay for one person rather than a family, constructing a budget will allow you to decide how much you can comfortably afford.
Groceries
Grocery shopping can take a bit of a hit on your wallet. If you find yourself going to the shops every day, you might be spending more than you would if you went once a week. Planning what you’re going to eat for the week, as well as any meal prep is a great way to save time and money when it comes to those essential household items. When you first move in, you may find yourself with a few slightly more expensive purchases as you stock up on staples such as cleaning products, herbs, and spices. Once you get into a routine, you’ll find you’re able to organise yourself better and notice patterns in your spending each week.
Insurance
There are varying insurances you need when it comes to living alone. If you’ve bought your home, you will need to investigate home and contents insurance to protect your property and its contents. For renters, while you don’t need home insurance, if you want to protect your items in the event they are stolen or damaged, contents insurance should be considered. While the landlord is responsible for any structural damage to the property (providing they have home insurance!), your belongings won’t be covered in the event of any damages or a break-in. Contents insurance also allows you to insure certain items of value for a certain amount.
You may also have other insurance policies to include in your budget, such as car insurance, health insurance, life insurance and even pet insurance! It’s worth checking in on your policies annually to see whether there’s another company offering a better deal to suit your needs.
Have more questions? Read our blog on why you should use an insurance broker.
Council rates
For home buyers, this one can sneak up on you! When you first buy your home, rates are factored into the settlement price, meaning most of us are often unaware of this bill until we get the next one in the mail. Council rates are a property tax paid by all property owners, to fund things like the maintenance of local roads, council facilities and public spaces like parks and gardens. When it comes to the payment of your rates, they must be paid in four instalments, unless an annual lump sum payment is accepted. How much you need to pay will vary from council to council but can be in the thousands.
Looking to buy solo? Head to our blog.
Other living expenses
If you’re living alone, you’ll still need to fund the cost of any other expenses you may regularly pay. This includes phone bills, gym memberships and streaming subscriptions. Having money set aside separately is also a good idea for when you want to go out with friends for dinner, to the movies, to a bar, or any other recreational activities. Having money allocated specifically for these types of social activities will help you to control your spending while still allowing you to enjoy yourself.
Download our free budget planner to prepare your monthly spending plan.
Upfront expenses:
Sometimes, we budget for the ongoing costs of living alone without considering the upfront one-off fees we may be faced with, as both renters and homeowners.
Removalists
Moving day is a big and exciting day. Whether you’re moving into your first house or your next house, you’ll need to work out a way to get your possessions from one place to the other. Removalist costs will vary based on how difficult the move is, how many belongings you need moved and where you’re moving. For local moves in Australia, the average cost for a removalist is anywhere between $75 - $300 per hour. However, if you’re looking to save some money and don’t have a lot of things to move, you can explore getting some friends and family to help, or even hire a trailer or minivan if you’re confident.
Bond (for rental properties)
Rental properties require a lump payment (generally the equivalent of four weeks rent) which will be refunded to you if the house is left in the same condition as it was when you moved in. If there are damages to the property, and you’re at fault, some or all of this money will be used for repairs. If the property is in good shape when you vacate and your bond is returned, it can be a nice windfall at the end of your lease contract as a bit of extra money in the bank!
Furniture
If you’re moving out for the first time, you’re probably going to need some furniture for your new home. If you’re looking to save some money, places like Facebook Marketplace, op shops, or even second-hand stores are great for finding used pieces that are still in good condition. This gives you the chance to save for the furniture pieces you want later down the track, so you’re not hit with large costs upfront.
Moving out and living on your own is an exciting experience. You have the opportunity and freedom to do whatever you want, whenever you want, without having to consider or rely on others. Paying your way also can feel empowering but sticking to a budget is important to manage your money. If you’re ready to live on your own, get in touch with one of our financial advisor professionals today.
