Now that it's moving season, I figure this should be an
appropriate time for this article! Just finished post-secondary and accepted a
job offer? Dying to move out and become independent? Being able to live in a "nag-free"
environment and having personal space is probably the dream of most new graduates,
but is it wise and is it doable? – That's where a lot of them fail to consider
thoroughly. I have actually encountered at least one person who had to move
back home after her one year lease because she realized she could not afford
it. She even took on a second job to help pay for everything.
Here are some "hidden" costs that may seem obvious to some but sometimes not considered:
- Cost of having your own car instead of using your parents'
car, paying for your own gas, monthly parking space charges at the condo you
are renting, and expenses related to maintenance. Surprisingly a lot of rental
units do not come with parking, the landlord rents it out to other residents that
require an additional space. You might end up renting the condo unit from one
landlord and renting a parking space from another owner.
- Additional food costs, due to A) not having your parents cook for you or fill the fridge with groceries, and B) you will be working a lot and so you can expect to order takeout more frequently.
- Shared utilities cost: you will now be paying for your own internet and cable most likely, hydro bill on the other hand will probably be covered by your landlord depending on who you rent from. Cable bill may not be that big of an issue since a lot of us stream or watch TV online.
So the above list should help in identifying whether it's
doable, you will have to run some numbers for the condo you plan on renting.
Now is it wise to move out right away? To be on the safe side, it may be safer
to accumulate a sum of cash before moving out. You would then invest this cash
while using it as a safety net in case anything unexpected happens, eg. your car
might need repairs. There's a general rule of thumb, you should have enough
cash to cover 6-months of expenses as a safety net. Depending on how risk
averse you are, you could add to that time period of course. In fact, I believe
you should have enough cash to cover all your expenses for as long as you will
need to take to find another job in case this one fails. This means that it could be longer than 6 months depending on your career field.
Side note: Did you move at least 40km closer to your new
employment location? You may be eligible to deduct moving expenses against your
income for Canadian tax purposes. More information on what expenses are eligible can be found here:
Happy Canada Day folks!
-TT
