Young Single Mature Student 1st Time Move Outer!

Hello there,

1st time poster. I hope I'm doing this right.. 

I need advice on Budgeting and Renting vs Mortgage.

I would like to get my finances in order. 
I'm thinking of having different accounts for different areas of spending.
- How many would be recommended realistically so it doesn't get messy.
- Categories I was thinking: Maintenance. -(Food, toiletries, haircut, clothes etc) Uni (resources including a laptop, stationary, trips) Transport (car, train) Social (trips out, coffee catch ups etc). Bigger purchases and savings (holiday etc) Any advice would be great. Anything I should cover I haven't.

I hope to move out and have my own place. 
I have a Help to Buy and a LISA.
I have never been in debt & have no direct debits.
I have never owned a credit card. 
Would I need a credit score to apply for a rented place or mortgage. 
Is it better to rent or buy? 
I was thinking about it and paying off a mortgage can perhaps feel like rent. 
But i've always thought renting is just throwing money away?

I'm not sure where to start?

Sorry if this is too much in one post. 

Thank you for any suggestions and for taking the time to read this. 

«1

Comments

  • Brie
    Brie Posts: 9,340
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    I don't think there's a need for different accounts for different things although I realise it depends on how your mind works.  I have everything in one account (Virginone via RBS) and when I look online I can assign any transaction in or out to specific categories.  Your alternative would be to build a simple spreadsheet to break things down and help you budget.  

    People will say that credit scores aren't important but that's because financial institutions will base their decisions for mortgages etc on the information on their systems.  In order for that to work for you you really should get a credit card to help you build up that info.  Also ensure you set up a direct debit for it, either paying the minimum or a set amount or the full balance each month.  If you later use the same bank to get a mortgage they will be able to see your payment record which hopefully will be sparkling!

    Also ensure you are on the voters register as that all builds up the picture of you.

    <pendant alert - it's stationEry you need for uni, not the standing still stationAry.  I always remind myself that the paper one is spelled with an E for Envelopes.>

    Good luck with your financial planning - you sound very very sensible.  I wish I'd started being that way at a younger age!
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • WillPS
    WillPS Posts: 3,054
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    If you get *any* credit card then *any* lender is able to see the payment history on it, so long as the lender checks at least one of the bureaus that the credit card reports to.

    It's certainly not a daft idea to get a credit card but you don't need one to have a credit record - having an overdraft, mobile phone contract or even just paying certain utility bills will prove that. Credit card is just a relatively easy one, but it's also easy for it to tempt you in to spending you can't afford (if you are liable to such temptations).

    One option is to get a credit card, put a monthly payment on it each month (something like Netflix or a regular Amazon top up) and set a direct debit to pay it in full each month. That way you have a provable record of actually making use of the credit responsibly.

    But don't get caught up in it - there are millions of homeowners who have never had a credit card so it's not an absolute requirement.
  • Jami74
    Jami74 Posts: 982
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    HBoz said:
    Hello there,

    1st time poster. I hope I'm doing this right.. 

    I need advice on Budgeting and Renting vs Mortgage.

    I would like to get my finances in order. 
    I'm thinking of having different accounts for different areas of spending.
    - How many would be recommended realistically so it doesn't get messy.
    - Categories I was thinking: Maintenance. -(Food, toiletries, haircut, clothes etc) Uni (resources including a laptop, stationary, trips) Transport (car, train) Social (trips out, coffee catch ups etc). Bigger purchases and savings (holiday etc) Any advice would be great. Anything I should cover I haven't.

    I hope to move out and have my own place. 
    I have a Help to Buy and a LISA.
    I have never been in debt & have no direct debits.
    I have never owned a credit card. 
    Would I need a credit score to apply for a rented place or mortgage. 
    Is it better to rent or buy? 
    I was thinking about it and paying off a mortgage can perhaps feel like rent. 
    But i've always thought renting is just throwing money away?

    I'm not sure where to start?

    Sorry if this is too much in one post. 

    Thank you for any suggestions and for taking the time to read this. 

    If you are a student, what income will you be using for your mortgage application and payments? And will you definitely be staying in one place for long enough to make it worth buying a place? Can you afford a mortgage or to pay rent on a place of your own as a student?

    You don't necessarily need lots of different bank accounts. Some accounts let you divide your money into different pots (monzo, starling), or some let you have multiple savings accounts attached (Halifax). 

    Personally I don't see a need for loads of categories. I'd have a bills account (for rent, phone etc), a spending account (food, clothes, social, train, stationery etc) and savings account (laptop, holiday, yearly car bills).
    Debt Free: 01/01/2020
  • GaleSF63
    GaleSF63 Posts: 1,535
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    Brie said:
    I<pendant alert - it's stationEry you need for uni, not the standing still stationAry.  I always remind myself that the paper one is spelled with an E for Envelopes.>
    Pedant alert, it's pedant, not pendant.
     :) It's funny how often the person correcting slips up!  :)

    (I use the E for envelope check as well.) 
  • Brie
    Brie Posts: 9,340
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    GaleSF63 said:
    Brie said:
    I<pendant alert - it's stationEry you need for uni, not the standing still stationAry.  I always remind myself that the paper one is spelled with an E for Envelopes.>
    Pedant alert, it's pedant, not pendant.
     :) It's funny how often the person correcting slips up!  :)

    (I use the E for envelope check as well.) 
    I'm a pedant with a pendant!!!  (wonder how many years I've been getting that one wrong??!?!?)
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • HBoz
    HBoz Posts: 5
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    Brie said:
    I don't think there's a need for different accounts for different things although I realise it depends on how your mind works.  I have everything in one account (Virginone via RBS) and when I look online I can assign any transaction in or out to specific categories.  Your alternative would be to build a simple spreadsheet to break things down and help you budget.  

    People will say that credit scores aren't important but that's because financial institutions will base their decisions for mortgages etc on the information on their systems.  In order for that to work for you you really should get a credit card to help you build up that info.  Also ensure you set up a direct debit for it, either paying the minimum or a set amount or the full balance each month.  If you later use the same bank to get a mortgage they will be able to see your payment record which hopefully will be sparkling!

    Also ensure you are on the voters register as that all builds up the picture of you.

    <pendant alert - it's stationEry you need for uni, not the standing still stationAry.  I always remind myself that the paper one is spelled with an E for Envelopes.>

    Good luck with your financial planning - you sound very very sensible.  I wish I'd started being that way at a younger age!
    Thank you so much for your thorough reply Brie!
    I think you make a great point about loads of different accounts. 
    At the moment I have a few - I'm a sucker for a switching bonus and bonus interest rates. But I'm a bit all over the place & need to condense!
    I think I will look into a credit card..
    I was thinking of using it for small things - toiletries & paying off IN FULL!!
    I am on the voting register - thank you I hadn't realised that is a factor. 

    Honestly, I'm awful with spelling. I am nervous about September! - I'm certain there was a fault in their
    system letting me in! Thank you for the life hack with E for envelopes, it will serve me well!

    Thank you for your kind words I try to get organised, yet end up in a pickle and all over the place! 
  • HBoz
    HBoz Posts: 5
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    Forumite
    WillPS said:
    If you get *any* credit card then *any* lender is able to see the payment history on it, so long as the lender checks at least one of the bureaus that the credit card reports to.

    It's certainly not a daft idea to get a credit card but you don't need one to have a credit record - having an overdraft, mobile phone contract or even just paying certain utility bills will prove that. Credit card is just a relatively easy one, but it's also easy for it to tempt you in to spending you can't afford (if you are liable to such temptations).

    One option is to get a credit card, put a monthly payment on it each month (something like Netflix or a regular Amazon top up) and set a direct debit to pay it in full each month. That way you have a provable record of actually making use of the credit responsibly.

    But don't get caught up in it - there are millions of homeowners who have never had a credit card so it's not an absolute requirement.
    Thank you for your reply! 

    & thank you for your reassurance!

    I was thinking I may need to get a credit card because I don't have any direct debits at the moment. I'm stuck in the dark ages with a pay as you go phone! & don't have Netflix!
    Brie made a useful point with the voting register!

    If I did get one I will definitely pay it off IN FULL. & use it for small items.

    WillPS thank you for your time
  • HBoz
    HBoz Posts: 5
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    Forumite
    Jami74 said:
    HBoz said:
    Hello there,

    1st time poster. I hope I'm doing this right.. 

    I need advice on Budgeting and Renting vs Mortgage.

    I would like to get my finances in order. 
    I'm thinking of having different accounts for different areas of spending.
    - How many would be recommended realistically so it doesn't get messy.
    - Categories I was thinking: Maintenance. -(Food, toiletries, haircut, clothes etc) Uni (resources including a laptop, stationary, trips) Transport (car, train) Social (trips out, coffee catch ups etc). Bigger purchases and savings (holiday etc) Any advice would be great. Anything I should cover I haven't.

    I hope to move out and have my own place. 
    I have a Help to Buy and a LISA.
    I have never been in debt & have no direct debits.
    I have never owned a credit card. 
    Would I need a credit score to apply for a rented place or mortgage. 
    Is it better to rent or buy? 
    I was thinking about it and paying off a mortgage can perhaps feel like rent. 
    But i've always thought renting is just throwing money away?

    I'm not sure where to start?

    Sorry if this is too much in one post. 

    Thank you for any suggestions and for taking the time to read this. 

    If you are a student, what income will you be using for your mortgage application and payments? And will you definitely be staying in one place for long enough to make it worth buying a place? Can you afford a mortgage or to pay rent on a place of your own as a student?

    You don't necessarily need lots of different bank accounts. Some accounts let you divide your money into different pots (monzo, starling), or some let you have multiple savings accounts attached (Halifax). 

    Personally I don't see a need for loads of categories. I'd have a bills account (for rent, phone etc), a spending account (food, clothes, social, train, stationery etc) and savings account (laptop, holiday, yearly car bills).
    Jami74 thank you for your reply. 

    You make a really good point about staying in one place. That I don't know! 
    All I know is that it is 3 years with a potential year abroad. The uni is in London. 
    I have missed the boat with Student Accommodation. 
    Being a lot older than 18 I didn't really fancy halls anyway.

    I suppose in my fantasy mind I'd like to find somewhere I could stay for the duration & afford it. (so outside London!!)
    I hope that once i've settled in & managing work load etc I'll be able to pick up a part time job to boost the Maintenance loan which is what I'd use to help me pay for rent bills travel etc..

    I'm trying to work out what is best & affordability. If you've read my replies above, I'm all over the place!!!

    Thank you for the tip about accounts. That appears to be the consensus!
    I will look into Monzo and Halifax - I have accounts with them already too. 

    Thank you for your time! 
     
  • You still haven't addressed the elephant in the room - what are your earnings that will allow you to get a mortgage? Student loan is all well and good for student halls/rented rooms but unless you have huge savings and a proper sideline income, how are you going to pay rent on a normal house let alone a mortgage?

    An overdraft is not a good way to build credit history, having one and in particular, using one, shows you live beyond your means and have to use what is effectively a pay day loan in order to survive. Get a credit card and use it for everything you buy, pay off in full every month. Get a contract mobile phone (even if SIM only) and pay it off every month. Do that over the presumably 2-4 years of uni and it will at least establish a credit history. Getting on the electoral role is good though if you move around every year at uni, it might be better to leave it in your current residence (assuming living at home where you can get the paperwork) and put all the bills etc in one place then when you leave and find somewhere more permanent, then update it. If you plan to be in one address all the time at uni then use that.

    Credit history takes time to build and you will also need a stable job with good earnings to get a mortgage afterwards
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