Moving Out of Mum and Dad's House
06th October 2017
You're not a child any more. You're out in the world, earning money, paying tax and – if you're smart – claiming tax refunds. So why are you still living in your parents' home?
It's getting to be a pretty common story, too. Right now, there are about 1.23 million people in their mid-20s to mid-30s still living with Mum and Dad. That's a rise of over a third in the last 10 years. If you widen the age bracket to include people from the age of 21, the numbers more than double.
The sad truth is it's getting pretty hard to fly the nest these days. House prices for first-timers are close to 50% up on where they were a decade back, according to the Office for National Statistics. Even renting is out of many people's practical price range.
Some might be lucky enough to be able to dip into the “Bank of Mum and Dad” for a first month's rent or even a house deposit. The figures show that there are plenty of people without that pad to launch from, though. Striking out on your own for the first time is rarely an easy thing to do. However, there are a few preparations and precautions that could give you a jump start:
Aim to travel light
You've got to be realistic about the financial weight you can carry when you move out. If the local rents or house prices are too high, be prepared to look further afield. Work out what kind of place you need, rather than going straight for your imaginary Dream Home.
You won't get far with a tonne of debt on your shoulders, either. If you've got credit cards or loans hanging around your neck, do your best to pay them down before you make your move.
Take your time and watch out for money-traps
Once you've got your debts under control, it's time to build up the cash you'll need to start your journey. If you're buying a place, you'll probably be targeting your deposit first. Generally, a larger deposit can mean better rates on your mortgage.
Be careful not to over-extend yourself, though. Don't forget about the extra drains of Stamp Duty, moving costs and the fees your solicitor charges. At a bare minimum, you should have at least enough money in hand to cover your rent or mortgage for several months.
Consider a dry run first
So, you've brought your debts down, built up your deposit and held a few months' worth of payments in reserve. Before you take the plunge and move out, spend a little time practicing sticking to a budget.
If you've done your homework, you should already have an idea of what a typical month is going to run you. That means your rent or mortgage, Council Tax, utility bills and so on. Set that money aside as if you'd spent it. At the end of the month, check your maths. Did you stay inside your means? If you went over, you need to work out what went wrong and fix it.
Check if you're due a tax refund to boost your moving funds.
A lot of RIFT clients tell us they're putting their HMRC tax refunds toward a house deposit or moving costs.
If you're looking to find a foothold on the property ladder, a fat cheque from HMRC can be a pretty big leg-up. Before you empty your own pockets, always make sure you aren't leaving too much cash in the taxman's.