Leaving the nest? Prepare yourself financially

Moving out of your parents’ home can be an exciting adventure. If you’re contemplating the big move, read on to know what to expect.

The good? Independence. Live by your own rules, handle responsibilities your way. No curfews or restrictions.

The bad? Isolation. Living alone can get lonely, especially if you’re moving abroad. You’ll miss the support system you currently have.

The ugly? Bills. From coffee to electricity, you’ll take care of everything.

Plan ahead for a smooth transition. Soon you’ll be ready to take on the world (and those bills) independently. Here are some ideas to get you started:

Educate yourself on living costs

Moving out involves more than paying monthly rent. Water, electricity, gas, cable, phone are just a handful of expenses that may catch you unawares. While you research, draw up a list of two types of costs:

Ongoing costs include rent, utility, food, entertainment, transport… to name a few. Account for any credit card or a loan payments in this list.

One-off costs include hiring movers, rental deposit, connection fees for utilities, parking permits, furniture, furnishings, linen, kitchenware and such.

Learn how to make budgets and stick to them

While you’re living with your folks, ask about the everyday expenses they bear. Once you have the estimates in hand, write out a prospective monthly budget for a one person household. Is it affordable, given your current income?

Consider getting a flat mate, or shifting to a locality with cheaper rent to stay in budget. Check how far your preferred location is from your workplace as this will affect daily transport costs.

Do a dress rehearsal

Never paid a bill? Do a trial run of taking up expenses while you’re living with the parents. Pay them rent, contribute towards bills — so you can acclimatize yourself to financial independence.

Create a safety net

Try to pay off as many debts as possible and put any surplus into high-yield accounts. When you start bearing the burden of all household expenses, disposable income may become a thing of the past. And the cushion of money you created while living with mom and dad will help during unexpected financial crisis.

True independence means not relying on your parents as a safety net, but creating one for yourself.

Moving to a different country?

When moving abroad include flight, visa costs and legal fees to your budget. Additional factors are:

#Cost of living: Compare the costs of the basics in your destination country to your original country. UK, Australia, Switzerland and some Scandinavian countries like Norway are the most expensive to live in.

#Currency conversion: What’s the rate of exchange with your own currency? How easy is it to transfer money home? Does the conversion help you save? Ask people who are currently living there to get a good idea.

#Taxation policy: It is worth getting expert advice to help you understand the tax laws at your new home. The GCC does not have direct taxes, but most other countries do.

Settle your taxes, bills and penalties at home as well, before you move.

#Healthcare: Health insurance can be expensive. Check whether your employer is providing for it. If not, budget for additional healthcare costs, regardless of how healthy you are.

Once you’ve done all of the above, you’ll know if you’re ready to make the leap.