Everything you need to know about living alone for the first time

Leaving the nest for the first time can be an overwhelming experience, and it is important to be prepared for the journey and financial implications. If you have the opportunity to weigh the advantages and disadvantages of certain living situations (i.e. your move is not super time-sensitive), then it’s a good idea to look at your options! Renting vs owning, what sorts of insurance you will need, and what things need to be maintained – these are the things you should consider when searching for your new home. This post aims to be a near-comprehensive guide to living on your own for the first time.

Renting vs Owning

When considering this aspect of your living situation, you need to think about what is important to you. Do you value stability and stillness, or are you more restless, preferring to wander and explore? Do you like the control of all decisions being left to you, or do you prefer to leave them to someone else? While owning a home has been considered a major life milestone for a long time, many young people prefer the freedom associated with renting to the commitment of a house. If you rent your space, there are no obligations to stay in it long-term beyond what is outlined in your lease, giving you the option to move around within a city or across a country practically on a whim. Maintenance is largely handled by the landlords, so your only duty is to pay rent on time and respect your space.

Homeownership, on the other hand, is a long-term commitment. Not only is it a huge investment, but it is ultimately your responsibility to maintain and repair the place. This does, however, give you the freedom to make your home however you like it! You are not restricted to certain paint colours, you can renovate to your heart’s content (within your budget of course), and you don’t have to worry about maintenance intrusions except on your own schedule and request. In addition, it is not uncommon for payments on a mortgage to be lower than average monthly rent payments.

The other consideration is down-payment. If you have the substantial savings for a down payment on a house, then you are that much closer to owning a home – in Canada, there are lots of incentives and tax credits for first-time homebuyers as well, helping to offset this cost. You can also bear in mind how this affects your net worth – your home is an asset, and your mortgage is a liability. It can help your credit score to be trusted with this financial responsibility, which opens up new investing opportunities.

Types of Home

There are many different types of places to live, each with their own advantages and disadvantages. Here’s the pros and cons of each, and what you should consider before signing any paperwork.

Detached House – this is what you typically think of when you hear the word ”house”. The quintessential front-door, backyard, driveway situation. This is occasionally an option for rent, sometimes in which you would live in a room within the house or in a separated basement unit, but more often is something you purchase outright. If you are the homeowner, you can rent out spare rooms to friends to help pay off your mortgage faster – this strategy can save you thousands of dollars in interest. For example:

You take out a 25-year, $300,000 mortgage on your home at 4.5% interest. Your monthly payment is $1,660.42. By getting a couple of tenants and charging each half the mortgage amount in rent, you can double your monthly payment and pay off your loan in just ten years – saving you over $130,000 in interest.

When looking at this sort of home, take these things into consideration: amenities like yard space, basement, garage and/or driveway availability, number of bedrooms, storage; the age of the windows (poorly-sealed openings can drive up your heating and cooling bills); cold spots within the house; the age of the roof coverings (shingles have a typical lifespan of 10 to 20 years); and property value, which affects your municipal property taxes.

Apartments and Condos – These sorts of units are independent living spaces with their own kitchen and various configurations of bedrooms. Each can be either rented or purchased, though typically apartments are associated with renting and condos with ownership. When looking at these sorts of units, consider the following: ownership’s policy on redecorating (if you have to return the paint to its original condition upon vacating a rented unit); the associated fees with living there (condos typically have monthly or annual fees to contribute to general building upkeep and unit maintenance, and apartments may have their own fees for certain services or requests); transfer of noise between units; on-site amenities (laundry, on-site superintendent); typical turnaround time on service requests; and, if they aren’t included, typical utility costs. If you are a pet owner, or may want pets in the near future, you should also check your building’s policy on pets.

Whether you are intending to rent or own, and regardless of the home type, you should consider the following:

1. Your budget. Do you have the funds for a down-payment or deposit on a new place? What are your average monthly payments, including utilities and applicable taxes? Your monthly housing expenses should not exceed 30% of your income.
2. The location of the building. Is it close to your workplace? Your family and friends? Is it in a safe neighbourhood? Are there schools nearby for your children (present or planned)? Are there amenities nearby (gym, grocery stores, library, etc.)? Are there major construction projects planned in the area that may affect road closures or noise levels?
3. The age of the building. 40 years is the average lifespan of most buildings – at that point, you must consider major repair work to maintain the building envelope’s integrity or allow it to be demolished. If the building is significant in age, you may want to look into whether it is a consideration for heritage designation. Canada takes pride in its conservation efforts; as a relatively young country, we recognize the importance of preserving our built heritage for the future, and take these precautions well in advance. As an owner, keep in mind that heritage buildings have certain provisions which prevent the owner from making any major renovations without extensive permits and investigations into the impact it may have. As a renter, you may want to consider the age of certain appliances and windows, as their inefficiency may increase your utility costs.
4. Your intended length of stay. If you’re a student only looking for an 8-month stay during the school year, try looking at local sublet/rental Facebook groups and be prepared to have some roommates. If you intend to stay at least 12 months, look for long-term rental options on apartment-mapping sites or local listings on Kijiji. For those seeking to fully settle for 10 or more years, or just looking for a renovation project to flip for a profit, detached houses may be the way to go.

Now that you’ve chosen where to live, it’s important to protect your new home! Next up: home insurance.

Types of Home Insurance

Home insurance can be boiled down to the protection of two things: the property itself, and your own possessions. Home insurance can be bought whether you rent or own the place where you live – there is Homeowner’s insurance, Condo insurance, and Tenant insurance. These types and exclusions may differ based on your province, so it’s important to talk with a local qualified insurance broker to get the most accurate information.

Homeowner’s insurance typically protects against the owner’s loss due to fire, theft, or common natural disasters. As houses typically have more maintenance considerations than apartments and condos, it is important to recognize your own liability in the event of a claim. If you do not properly maintain your home (such as not replacing your shingles every 20 or so years, inspecting for water damage and cracks in the foundation after the spring thaw, clearing your eavestroughs to ensure proper drainage away from the home, and maintaining your plumbing system), the insurance company may find you at fault for negligence and deny your claim.

Condo insurance protects units within a condo building, and handles contents such as appliances, clothing, and furniture, as well as items stored in on-site storage lockers. It is important to note that while the condo building may have its own insurance, it may not protect the condo units themselves. If there are damages to a wall in your unit, it may be your responsibility to repair it. An insurance broker can look at the exclusions on the condo building’s insurance and help identify deficiencies that you will need covered.

Many tenancy agreements are conditional on the applicant having tenant’s liability insurance, which protects the tenant in the event of unintentional damages to the unit or bodily injury to guests in the unit. Liability insurance does not necessarily cover the contents of the unit (such as clothing, appliances, and furniture). It is important to discuss your situation with a broker to ensure you get all the coverage you need.

With all this in mind, here are some tips for taking care of yourself while living alone.

How to be more Self-Sufficient

According to the 2016 Canadian Census, 34.7% of young adults (aged 20 to 34) were living with at least one parent in 2016, many of whom had never left their parents’ homes before. This situation is extremely common, and though the census does not indicate the reasons for this, we can guess at a few: some young adults remain at home to rely on parental care and live rent-free while paying off student debt and starting a new career; some may move back in with a parent (or remain at home) to care for them though a difficult illness or disability; some may just have a comfortable relationship with their family and neither parent nor child feels the need to depart. Regardless of the reasons for having stayed, most children will eventually depart and start their life in a new home. Here is a basic list of things you should know how to do for yourself before you live on your own.

1. Cooking. Most packaged food comes with simple instructions on how to prepare it, but knowing the basics of how to make meals from scratch opens up a whole new world of healthy eating. There are lots of YouTube channels dedicated to simple tutorials on this exact topic. You can start by Google-searching for your favourite recipe, or asking your parents to show you how they make your favourite dish. Investing in a nice kitchen knife will make cooking far more pleasant – just be sure to take good care of your tools!
2. Shopping. While this one may seem simple enough, many people fall not the trap of not having a clear plan before going to the store. Taking inventory of the things you already have can help you formulate a shopping list – just be sure you actually stick to it! If you have the time, it’s a good idea to compare prices at different stores for the same product to get the best deal, and time your purchases with sales (especially when getting things you want rather than need).
3. Cleaning. When it comes to cleaning, it is much easier to maintain than is it to fix. Doing a basic wipe down of all surfaces in your home with a disinfecting wipe, making a point of sweeping or vacuuming the floors once a week, and keeping on top of your dirty dishes can help keep your place feeling tidy and manageable – no need to scramble to tidy up before guests arrive if everything is already in its place! If you are attempting a massive cleanup of your whole space, make sure you research the household cleaners you use. Some chemicals don’t play nicely with others, and you wouldn’t want to accidentally make something harmful to you.
4. Budgeting and saving. After all your expenses have been paid each month, what is left over from your paycheck? Our investment team at Currey Insurance and Investments can diagnose any deficiencies in your planning to help you achieve savings goals. You can also check out our Emergency Fund Budget Sheet to start getting an idea of your “rainy day” fund goals – the savings you dip into during emergencies, like sudden loss of income.
5. Communication. If you’re having roommates that aren’t your family for the first time, it is easy to have clashing personalities result in tension or arguments. While it is important to have conviction and stand up for yourself, maintaining healthy interpersonal relationships often means compromise! Make sure to ask yourself if the juice is worth the squeeze (if the fuss is worth the outcome). Keeping an open line of communication with your partner and roommate(s) can also help prevent big arguments from breaking out over seemingly small things. In addition, talking with close friends and loved ones can help reduce strain in your life and make managing your mental health easier.

 

To discuss homeownership, renting, and budgeting with a qualified professional, you can reach out to our team at shane@curreyinsurance.com. We look forward to the opportunity of serving you!