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Financial Fitness For Renters
Entering the job market and finally getting your own place to stay starts the barrage of bills and commitments. You’ve drawn up a budget and you’ve tried to stick to it meticulously, but you’re left with nothing to save. Can you make your pay last to the end of the month and still have enough to save?
Saving Up For Deposits
The very first thing well-meaning bankers will tell you is to start saving up for a deposit for a property of your own or for a vehicle. Even though this may seem like a good idea, there are a few things that need to be set up first before heading in that direction. They are:
- Building up an emergency savings: this needs to be separate from your deposit savings as you will need emergency savings throughout your life.
- Cash or credit: Instead of looking at new vehicles, finding a used one in a good condition may also be a good option. Keep an eye out for low mileage and make sure to take someone along who has knowledge of cars.
Building Up Your Credit Record
This is a great time for you to build up your credit record, however, a credit card isn’t necessarily the only way to do it. Make sure that you have a good standing with your bank. If you’re still on a savings account, ask them to convert it to a checking account. This way, you will be able to build up a reputation with the bank internally, which would make it easier for you to apply for your home loan or vehicle finance without having other debt to burden you.
Manage Your Expenses Well
Contrary to popular belief, the best way to keep a good credit rating is by having as little debt as possible. There are a few other items that may adversely affect your credit rating as well, for instance, insurance premiums and cell phone service provider accounts.
It is also important that you keep your bank account nice and tidy. Make sure that your account is always funded and that there isn’t an opportunity for returns on the account. Ensure that the deductions on the account are always provided for.
Build Up A Good Reputation With Your Landlord
Even though this may seem like a strange piece of advice, having a good relationship with your landlord could be beneficial in the long term. Taking care of the property you’re renting could just be an investment into your own future property. Situations change and landlords often need to sell their properties. Their tenants are often the first interested in purchasing the property. As a tenant, you’re in the fortunate position of knowing exactly what the shortcomings of the property are. This creates an opportunity where you are able to negotiate the sale price of the property.
Keep Your Expenses In Line
Using up your entire salary for expenses will leave you with very little to save. Ensure that you save first and then sign up for all the wonderful things you want in your home. This will include cable, takeout and online shopping where you pay an exorbitant delivery fee. If there is a more cost effective way of things, try to find it.
Live Below Your Means
Try to keep your rental expense to 25% of your income and not any higher. Even though the recommended portion is a third of your income, this will leave very little for saving. Getting a flatmate is also great to keep the expenses low, but you need to be able to pay it on your own in case they don't work out.