Peer to peer investments put your capital at risk, and you may get back less than you originally invested. Returns are not guaranteed if the borrower defaults.
You can save more towards moving out by spending less on:
Travel costs: If you drive, see if you can make your car insurance cheaper. Car sharing or switching to public transport could save you money too. Travel by bus or train? Check if a railcard could cut the cost and book in advance to save.
Mobile phone: On a contract? Check if you can switch to a SIM-only or pay-as-you-go deal to save money: or haggle for a cheaper price on your existing contract.
Entertainment: Cinema tickets, nights out, drinks at the pub, they all add up. If you don’t want to cut out regular cinema trips or your TV streaming services, reduce your costs by getting the best deal. Deals such as a Cineworld Unlimited card or Amazon Prime may work out cheaper.
Before you take any decisions, especially if they’ll mean being tied into a contract, work out what you are spending money on. Writing a budget to find out where your money is going and where you can cut costs is a great place to start.
For example, if you stop off in Pret or Costa on a daily basis you could easily be spending upwards of £60 a month on lattes, and that’s before you eye up the pastries.
If you work full time your salary is likely to be your main source of income, so asking for a pay rise could really help your efforts, especially if you’ve not had one in a while. You might find that while you’ve been beavering away the average salary in your field has been rising.
There are lots of other ways to earn and save a little extra too:
Use a penny jar to save up your loose change
Look at cashback credit cards to earn extra cash on your spending
Forego takeaways and ready meals. It’s almost always cheaper to cook from scratch, especially if you make batches and save some for other meals
Where possible buy own-brand rather than branded groceries, and stick to your shopping list – don’t be tempted by the till-side goodies
Paying your parents rent is good because it’ll prepare you for the inevitable financial commitments when you move out, but it will slow down your savings efforts.
Speak to your parents about how much rent you pay, and whether some of it could be put towards your moving out fund.
Sharing how much you are saving each month with your parents can also be a good idea, as it can help them see that you are working towards your goal.
Getting a decent return on your savings could help you move out quicker, so it's worth finding the best savings account you can, as there are plenty of options to choose from:
Regular savings accounts can offer more attractive interest rates but you will only be able to save a set amount each month, normally between £100 and £500.
Peer-to-peer savings offer attractive returns by lending your money to borrowers online, but they have their risks.
High interest current accounts often beat the leading savings account rates, but limit how much money you can earn interest on. Here’s when to choose them.
All of these accounts come in standard and ISA versions, the difference being that money held in an ISA never has tax charged on the interest you earn. In other accounts, interest you make over your personal savings allowance (£1,000 a year for basic rate taxpayers, and £500 a year for higher rate taxpayers) is subject to income tax.
You’ll also need enough money to cover ongoing costs. How much these will be depends on your plans after leaving home, but common ongoing costs include:
Rent or mortgage
Gas & electricity
Broadband & phone
The upfront costs will be smaller, although you’ll still need to save up for a rental deposit, which is capped at 5 weeks’ rent if the total annual rent is less than £50,000 and 6 weeks’ rent if it is more than that..
There are also letting agent fees to pay, including the cost of reference checks, and the cost of moving your belongings to your new home.
Some landlords also charge you for a professional cleaning service or a holding fee to keep the property vacant until your contracts are signed.
You will need to save up enough money for a house deposit, which is usually at least 5% of the property value.
You also have to pay mortgage fees, solicitor fees and other costs when you buy - which means the upfront cost will be quite substantial.
Whether you are paying the mortgage or rent it’s important to ensure you have enough emergency savings to cover unexpected events and outgoings. These could be anything from losing your job to your boiler going kaput (if you are a new homeowner) or your car breaking down. The rule of thumb is aim for three months of household income.
If you’re worried the cost of paying everything yourself is too high, then there are ways to make savings:
Look at smaller properties: Whether you plan to buy or rent, you will have to pay more for larger properties or those in more desirable locations. If you need to bring the cost down, you might need to look at studio flats or ditching the spare room.
Rent with someone else: Sharing the cost of renting with a flatmate can make it much cheaper and more affordable. If you have friends who are planning to move out soon, speak to them about teaming up, alternatively look at rooms in flat shares.
Let out a room if you’ve taken on a mortgage. This can prove problematic. You’ll have to clear it with your mortgage lender, you’ll need to declare the income if you earn more than £7,500 in rental income (as laid out in the Rent a Room scheme). And then there is the issue of who you’d be sharing your home with.
You have to pay Council Tax whether you rent or buy, but you could get a discount in some cases, e.g. if you live alone, so check if you could save.
If you’re still unsure how much you can afford, visit the Moneyhelper website for free and impartial advice.
This is best avoided. Starting off living independently with large outstanding debts is going to make things harder at a time when you will be adjusting to paying your own way.
If you think you might need to borrow some cash to get you started, you may need to consider waiting a little longer before moving out on your own.
As you approach moving day there are plenty of things to sort out before you leave home.
It's a good idea to write a checklist of all the companies and people you need to notify of your new address, so you don't miss anyone off.
Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.
Get on top of your finances, stay out of debt and make the most of your money with this ultimate checklist. Here's what you need to do to get control of your cash.Read More