Independence. That’s what most students are looking forward to above anything when they leave school. Your time will be your own – what you do and where you go next will be completely up to you. It’s incredibly exciting, but also a little nerve-wracking.
All those things you’ve never had to think about before because adults or institutions you didn’t even know about took care of them for you, and suddenly it’s now your responsibility- and that can feel a bit scary. After all, you don’t know what you don’t know! And one of the things that can feel the most overwhelming to think about, is money.
We all need it and we can’t live without it- but there’s more to money than simply earning it and spending it, however you like, and unfortunately, a big part of adult life is learning how to look after your money responsibly.
So we’ve put together five key factors to consider when it comes to budgeting for day to day life once you leave school and/or home
This is a tough pill to swallow, but simply having a roof over your head is expensive. For most people, it’s the single greatest monthly expense, and it’s why so many young people continue to live with parents or family who can put them up either rent-free or at lower rates of rent, while they save up. However, for some, this is not an option, so being realistic about where you can afford to live is important, and it goes hand in hand with your career.
For instance, many young people gravitate towards London after they’ve gained the qualifications they need, as it’s the country’s economic capital so it’s a real hotbed of jobs. However, it’s one of the most expensive cities to live in- not just in the UK, but in the world. The average cost of rent in London is £1,665, which is likely to be more than you’re taking home each month from work. Of course, this is made cheaper flat sharing, because that cost is divided by the number of people you live with, but that also means having less space of your own.
It might be worth considering other parts of the country to live in. Depending on your chosen career path, other parts of the country could offer you a better living situation with fewer costs attached. Manchester, for instance, is a buzzing city with great transport links and lots of career opportunities, but the average cost of rent is 55% cheaper than London!
Wherever you choose to live, though, make sure you can afford your rent on your salary after all your other expenses are taken into account. Draw up a budget based off the list in the rest of this blog, and it’ll reveal how much money you’ve got leftover to spend on rent. And remember, when it comes to budgeting, it’s best to OVER estimate monthly costs than underestimate. When the money is gone, it’s gone.
This is an expense you probably haven’t had to worry much about while living at home, but when you’re out fending for yourself, the monthly cost of eating 3 meals a day becomes very clear very quickly! Of course, you can spend as much or as little as you like on food, but the average person in the UK tends to spend £38.50 per week on food. That figure includes the amount spent on groceries PLUS the amount spent eating out. Having a social life is an important part of taking care of your wellbeing, so it’s worth factoring that into your costs.
It’s also worth bearing in mind that, on average, young active men have to spend more on food as their caloric intake can be up to 50% higher than your average person, working out to be about £60 per week on food! Food is something that you cannot live without, so if you find yourself struggling financially see if there are other areas or expenses you can cut down on. Simply changing where and how you shop can make a big difference to your monthly food expenses, and if you live with others, shopping as a group, cooking together and splitting the bills can help really cut costs- and it’s more sociable, too!
If you’re anything like me, this is an expense I didn’t even know existed until I left university. But if you’re an adult and not in full-time education, or covered by another exemption or relief, you must pay Council Tax. It’s a tax you have to pay when you’re renting or when you own your own home which goes to the council, and pays for things like your rubbish collection, and potholes getting fixed in your area etc. Unfortunately, the money that pays for those things that sort of seem to happen by magic when you’re growing up is actually paid for by the grown-ups. And now (lucky you!) you’re one of them! But almost half your council tax goes to supporting the elderly and vulnerable in your community, so that can help take the sting out of it.
The amount of council tax you pay depends on where you live, and what kind of property you live in. You can work out before moving in somewhere roughly how much your council tax will be each month based on what “band” your property falls into (each council tax band is given a letter). The best thing to do when you move into a property is to contact your council. You’ll register, and they’ll send you a bill. But don’t think that if you don’t register that they won’t know, or won’t contact you. They will. Making sure they have the exact date you moved into the property can help avoid any confusion about who should pay what.
Another monthly set of bills you need to account for are your gas, electric and water bills (yep, you have to pay for freshwater and wastewater, too. Sorry.).
Not all properties are connected to the gas mains, so you may only need to worry about electricity, but of course, your electric bill will be higher in this situation.
The cost of your gas and electricity bills will vary depending on the size of your property, how well insulated it is and how much energy you use generally. However, the average cost of dual gas and electric bills in the UK in 2019 was £104.50 per month. Before moving into a property, ask your landlord for an estimate as to the gas and electricity costs, as they should be able to give you an indication. It’s also worth finding out who the property’s energy providers are, and notifying them of the exact date you move into the property. This prevents you from being billed for energy used before you moved in.
Another expenses you’ll need to factor in is your broadband and TV License. The average cost of Broadband in the UK is £19.84 per month, while the TV License costs £157.50 annually per home.
If you’re feeling overwhelmed- we understand. These expenses and bills which you previously never had to worry about can feel intimidating, but remember that you’re not on your own. Everyone who you may look up to as a ‘responsible adult’ was once feeling exactly the same as you do!
There are several monthly expenses and bills that you might not think of right away when it comes to budgeting- but they quickly add up. For instance, your mobile phone bill. For most of us, that’s a monthly expense that we can’t go without, and depending on your contract that could be a larger monthly expense than your water bill.
Make sure you factor in all monthly expenses that improve your quality of life. That could include gym memberships, clothes, an allowance for going out a couple of times a week, bus and/or rail fares, petrol and insurance if you have a car etc.
Being realistic about the cost of living helps paint a picture of what you can and can’t afford – and sometimes shows where you perhaps need to start cutting costs. For example, if you’re consistently struggling to make rent, then maybe cut down the number of times you go out, and cook at home rather than ordering a takeaway.
Sometimes what can seem like small things add up to large expenses. Making swaps in terms of things like where you shop, going out, and ditching old subscriptions you’d forgotten about can really add up and help make monthly costs more manageable.
One of the biggest mistakes made when budgeting is simply not accounting for how many other monthly costs there are, aside from basic bills and rent. However, simply ignoring these, or assuming they aren’t ‘significant’ expenses can leave you feeling out of control of your finances and struggling to make ends meet. Keeping an eye on these monthly expenses and being honest with yourself about your expenditure can help you feel a lot more in control.
It’s natural to be a little anxious and to struggle at times to keep on top of your finances while you’re adjusting to living alone. Just remember that the best thing you can do is know your finances. Understanding where your money is going each month, and putting the right amount of money to one side for your bills as soon as you’ve got paid, helps ensure you’re not stressed at the end of the month. But also, remember that you are not alone. There are plenty of support networks out there you can reach out to for advice and support financially, so be sure to lean on those if you’re struggling.
Here at Your Game Plan, we want to ensure that every student has the confidence and support they need to have a happy, heathy, and successful future when they leave school.
If you’d like to find out more about how we can help you, click here for more information: www.yourgameplan.co.uk/for-students/