Term 4 - Book 3 - Moving Out of Home

Term 4 - Book 3 - Moving Out of Home

by Tracy Priest

​Workbook Introduction

​Moving out of home offers young people a real taste of independence - but the freedom comes with financial responsibilities.

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​Beyond rent, there are a number of additional living expenses young people need to consider when deciding if they can afford to move out of home.

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​A young person needs to know how much they can afford to pay:

​Workbook Introduction

​For one-off expenses, such as:

• ​Removalist fees/cost of hiring a moving truck

• ​Rental bond

• ​Connection fees for utilities (gas, electricity, internet/data, streaming services)

• ​Furniture, linen and appliances

​Workbook Introduction

​For annual and ongoing expenses, including:

• ​Rent

• ​Utility bills

• ​Food

• ​Entertainment

• ​Transport

• ​Parking

• ​Home contents insurance (optional)

​Workbook Introduction

​Young people may benefit from doing a budget before moving out. This will help them to work out if they can afford to move out of home and meet their new living expenses. It will also help them to keep track of what they are spending and to plan for unexpected and ongoing expenses.

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​It is a good idea to set money aside each month to budget for these ongoing expenses, as well as a bit extra for household emergencies.

​Activity 3.1: Look at the following advertisement:

1. ​Apart from the $150 in rent, what are examples of additional costs you would need to pay if you moved into this house?

2. ​Which of these costs are one-off?

3. ​Which of these ongoing expenses you would need to budget for?

​Activity 3.2: Can Kate afford to move out?

​Now that Kate has got her first job, she can't wait to move out. She earns about $500 per week in her part-time job. She's got her eye on a one-bedroom apartment she can have all to herself. The rent will be about $5300 per week. Kate is not sure if she can afford it, so calculated what her essential weekly living expenses might be:

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​Activity 3.2: Questions

1. ​What are Kate's total weekly costs, according to her estimated expenses?

2. ​How much money does Kate have left over to pay for rent and other expenses?

3. ​Do you think Kate can afford to live in this apartment? Why or why not?

4. ​What kinds of unexpected expenses might come up for Kate?

5. ​How could Kate meet these expenses with the left over $40 a week she has?

6. ​Katie decided to move into a much cheaper apartment. She still has a budget to follow. What can Kate do to help her keep track of her spending and stick to her budget?

​Moving out of home

​Young people moving out of home often choose to share with housemates to save money.

​For example: splitting rent and household expenses in a four-bedroom house with three other flatmates could be cheaper than renting a one-bedroom unit alone.

​Housemates need to agree on formal arrangements such as:

• ​who signs the tenancy agreement (lease)

• ​whose name/s will appear on the utility bills

• ​optional contents insurance cover

​Moving out of home

​They will also need to discuss informal arrangements like:

• ​Splitting the cost of the utility bills

• ​Dividing the rent and bond

• ​How bills and rent will be paid

• ​How to cover the cost of furnishing the home

• ​Sharing the cost of groceries or buying individually

• ​Responsibilities for household chores

​The key thing to remember is that formal living arrangements involve contracts that need to be signed. These contracts include binding financial and legal obligations.

​Moving out of home

​For example, even if the cost of electricity bill is equally split between the housemates, the person (or people) who signed the contract is legally responsible for paying the total bill. If the bill is not paid within an amount of time, the debt may affect the credit rating and future renting references for whoever has signed the contract.

​It is important that young people understand and agree to all terms and conditions included in formal contracts, and that they do not sign a contract until they do so.

​Informal living arrangements are simply agreements made with a shared understanding between housemates. People can generally change their mind about the arrangements without legal consequences. There are normally no contracts and no legal ties.

​Activity 3.3: True or False

1. ​If you sign a rental agreement and don't keep up with your rental payments, it could affect your credit rating.

2. ​You have to sign a written agreement to have a legal right to stay in a house as a tenant.

3. ​If both you and a housemate signed the lease, you do not have to pay for their part of the rent if they don't pay up on time.

4. ​If your name is on the lease but your housemate or someone else damages the property, you may have to pay for it even if it wasn't your fault.

5. ​A friend of your housemate is staying with you for a month and you have an agreement that you will split the rent. If they do not pay their share, there is nothing you can legally do.

6. ​A rental agreement is the only contract associated with living in a house.

​Activity 3.4: Will, Eddie & Mia share a home

​Will and Eddie are friends who are studying at university together. Another friend, Mia, asks if they would like to move into her share house, as her current housemate's are leaving to travel overseas. They agree that this is a great idea and go out for dinner to have a 'house meeting'.

​Eddie is waiting to hear back about a part-time job he has applied for, so Will and Mia offer to pay more rent in the short term if Eddie does more household chores. They discuss this and draw up a written roster to stick on the fridge. Since Mia is already living in the house, her name is on the rental agreement and all of the current utilities.

​The housemates will transfer rent and bills to Mia's credit card account one week before they are due to be paid each month. Will really wants to arrange Foxtel - Mia has already enquired about the cost options for this and says that she will take care of having it connected next week.

1. ​Answer the following questions:

1. ​What are examples of informal living arrangements the group has made?

2. ​What could happen if Eddie and Will don't transfer their share of money to Mia's credit card account on time?

3. ​What advice would you give to the group about the living arrangements they have made?

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​Now use what you have learned and the internet to complete the next section: Activity 3.5: Check for understanding. Once you have finished, save your work and upload to Connect.