For young Australians today, moving out of home can feel like a bigger leap of faith than ever before, with soaring rents and rising inflation, not to mention the ever-present doom of climate change.
Financially preparing to leave the nest takes much more than simply resisting the desire to splurge on smashed avocado and pricey caffeine. Successful independent living takes planning, organisation and a helping of luck.
For young Australians today, moving out of home can feel like a bigger leap of faith than ever before. Here’s how to make it work.Credit:Getty Images
Before you join the club, the first thing to figure out is the cost of leaving home and more importantly, the roof over your head. Start the conversation early. If you’re thinking about moving to college for university or just living independently, start planning at least six months in advance.
First, research the cost of renting where you want to live. That will be the biggest chunk of your post-nest budget.
Prepare to live where you might prefer not to. Living further from your favourite places, work or uni might be necessary to secure a rental. Know that rent will be disproportionately more expensive in desirable locations such as Melbourne’s inner north or Sydney’s inner west. If you live further away from your university or the city, your commute will be more expensive either in time, public transport costs or fuel.
After that, get to know the real estate agents in your target areas. Be well presented when you go on inspections and get your documentation in on time. Most importantly, get comfortable living with a rare species of black mould.
Then, there are the rising costs of utilities, groceries, transportation and also possible purchases of household goods and furniture to factor in.
Domain’s report last September showed that rents for units have increased by 15 per cent in total, 10 per cent in Melbourne and 14 per cent in Sydney. However, rent tends to come at a fixed rate so it can be the easiest thing to budget for most students.
For furniture, use the ‘Buy-Nothing’ communities on Facebook where you’ll see offers of free furniture or kitchen goods.
These groups are free to join and can help you fully equip your house for nothing. Some have tens of thousands of members and you can find fantastic deals which are not promoted on typical forums or online.
Although having FOMO is a chronic symptom of being a Gen-Z, avoid spending money just so you’re not missing out.
Thirdly, as expected, the cost of food is a unanimous issue for young people. Don’t just order UberEats – plan your grocery list before you go shopping, and stick to it (yes, that means no purchasing of traffic cones or chainsaws at Aldi).
Buy what’s on special and work out the days when staples, like tins of tuna, oat milk and hopefully some form of vegetable, are the cheapest. (In Canberra it’s Wednesday!) Scrutinise all your purchases – that $10 of snacks you buy each week will end up costing you over $500 every year.
Finally, work out your priorities. There is certainly a trade-off between enjoying experiences and saving money. Although having FOMO (fear of missing out) is a chronic symptom of being a Gen-Z, avoid spending money just for the sake of it.
With global inflation running at 7.8 per cent and wage growth only growing 3.3 per cent in the December quarter, it is crucial to work out what costs you can manage.
After all, many young people still find a way to crack the living-out-of-home formula. The latest census data from the Australian Bureau of Statistics shows four out of five people living in share-houses are aged under 35.
With some determination and light financial planning, moving out will be the first exciting next step to finding your place in the world.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Hannah Farrow is a third-year student at the Australian National University. She has a keen interest in economics and policy and is also the editor-in-chief of the ANU Observer.
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