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Leaving home is happening later in life for today’s younger generations. But whether it’s done in the teens, twenties or thirties, a barrage of unexpected costs can cause a nasty financial surprise.
Research by the University of Melbourne in 2013 found that many young Australians who left home were going without food and borrowing money from friends to survive financially.1
To make a successful move, and avoid becoming a so-called boomerang child – who returns after some time away because of money shortages – it’s a good idea to build a broad understanding of the costs of going solo. Here are a few of the main costs to think about.
If you’re still living at home, potentially the only main bill-paying experience you may have is your mobile phone account, and perhaps car expenses. When you leave home, your expenses will multiply dramatically! Rent or mortgage payments may grab the biggest slice, but there are also likely to be expenses for food, electricity, gas, water, furniture, entertainment and household maintenance.
The Australian Securities and Investment Commission’s moneysmart.gov.au website says before moving out, people should create a budget that includes the costs of actually moving as well as their expected ongoing living expenses. ‘You need to be honest with yourself when you do a budget so you can plan for any unexpected and ongoing expenses,’ it says.2
A detailed conversation between adult children and their parents – who are experienced in household bills – can be extremely helpful. We’ve also listed 50 ways to save money right here – give some of the tips a try!
You may already have a car and be used to the expenses that come with that, but if you’ve been using your parents’ car instead, then a new cost to budget for will be all things transport-related.
Living away from home means mum or dad’s car is no longer easily borrowed, which brings a new collection of costs. Apart from the purchase price, there will be fuel, maintenance, insurance, parking and registration expenses.
The Queensland Government’s Department of Transport and Main Roads has a detailed guide to buying your first car, with links to several helpful websites. 'Many students are unaware of the range of costs involved in purchasing and maintaining a vehicle,' it says.3
It’s worth considering if buying a car is the right financial decision. For some people, public transport and car-sharing services may be a cheaper option.
Car insurance is only one type of necessary financial protection. You may have life, total and permanent disability and income protection insurance through your QSuper account. In addition, home contents insurance is increasingly important for those who have a range of expensive electronic items, while private health insurance may no longer be covered by parents’ policies, so is another protection to consider.
On top of all the everyday costs comes putting money aside for life’s next big expense. For many young people who are renting, this means saving for their first home. For others, it means preparing financially for a family or perhaps a big overseas trip.
A written plan is a great way to put expected costs in order and get some idea of total living expenses. ASIC has a helpful and free budget planner at moneysmart.gov.au, and QSuper members can use our Budget Planner calculator.
Moving out of home is experienced by almost everybody – eventually. Parents can play a huge role in sharing years of experience with expenses, and it’s probably a good idea to listen!
1 University of Melbourne research: Is Leaving Home a Hardship? http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2013n10.pdf
2 ASIC guide to moving out https://www.moneysmart.gov.au/life-events-and-you/under-25s/moving-out-of-home/before-you-move-out
3 Queensland Government guide to buying your first car http://www.tmr.qld.gov.au/safety/school-road-safety/student-driver-education/buying-your-first-car.aspx
* SuperRatings does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for details of its ratings criteria. Past performance is not a reliable indicator of future performance.
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