Let's get started: Definition of terms
One-time expenses: You'll need up to three months' worth of advance rent and deposit each, and money for furniture and appliances, unless you can borrow from your parents.
Recurring expenses: There's rent, association fees, electricity, water, food, laundry, cleaning, Internet, cellphone bills, cable, transportation, and landline bills.
Savings and emergency funds: Set aside an emergency fund of at least two months' income as well as cash reserves of at least six months' income.
Other personal/lifestyle expenses: Your upgraded needs and wants: clothing, eating out, travel, recreation, movies, etc.
Here's how to allocate your income:
Set aside your emergency fund and cash reserves first! Then allocate 40 to 50 percent of your income for rent and utilities. Allocate 20 percent to short- to long-term investments (mutual funds or stocks help you grow your money exponentially). Then another 20 percent (as maximum) for your loan payments, and 20 to 30 percent for daily lifestyle expenses like food, transportation, clothes, eating out, travel, and shopping.
The Six-Month Test
Joe Ferreira, the president and CEO of Money Doctors Inc, suggests this test to check if you're financially ready to live on your own.
1. Calculate and outline all the expenses you would incur if you lived on your own.
2. Give this amount to your parents every payday for six months and see if you can still manage to save any money in spite of you having to "pay" rent and other expenses in their home.
3. Save enough cash to cover at least six months' expenses. That way, when you do make the leap, you'll have a cash cushion to fall back on in case you run into money trouble.
Is it better to rent or own a place?
According to Jun Sanchez Jr of Pinoydreamhousetoday.com, "It's not always necessary to have your own home. Your decision to buy or rent should be based on needs and financial capacity, as well as your long-term personal financial objective."
What's it like to buy your own condo?
"Finding the perfect place was primarily about what was accessible to my office, as well as the developer's track record: maintenance, master-planning, and which overall condo concept fit into my preferences." —JK, 30, property specialist
"While canvassing units, I had a price in mind and was determined to stick to it. I'd been saving up my money, so purchasing my condo was a combination of my savings and a small loan." —Therese, 31, account manager
"Some of the lump sum payments I had to make took me by surprise! If you're going to buy property, make sure you have enough for a lot of hidden costs." —Maggie, 35, editor
Any tips for buying property?
1. Clarify your intentions. Do you want property to move into, rent out, or sell in the future? If you don't know what your intentions are, then nothing will make sense. Worse, everything you see in the market will sound good.
2. Do your research. Use the Internet as a tool, but a reliable licensed real estate appraiser specializing in the area you want is more helpful (but it comes with a cost). Compare views, unit layouts, building utilities and amenities, locations, neighborhoods, or transport systems.
3. Know where you stand financially. How much are you willing to shell out? Whether acquiring property from a developer or the bank, study the various payment schemes closely to see if there is anything you can comfortably afford, which may include downpayment-by-installment plans. But always, always, always set aside for extra costs, which aren't optional.
4. Save up for all the hidden costs. The typical buyer's closing costs include documentary stamps tax (1.5 percent of the tax base), transfer tax (which varies from city to city), and registration fees, as well as insurance. (If you are investing millions, you probably want to secure that investment, right?) Condominium developments also have maintenance costs, like real property tax, dues and assessments, and due diligence.
Sources: Guita Gopalan of Colayco Foundation for Education; Mitor Alipio, licensed real estate broker and appraisor from Vivara Realty.
This story originally appeared in Cosmopolitan magazine, May 2014.
* Minor edits have been made by Cosmo.ph editors