Moving out on your own can be both exciting and scary. While you gain independence, you may also have to manage the costs of housing and other expenses on your own for the first time. If you don’t know how to budget for your first apartment properly, this may be challenging. So, how do you prevent yourself from getting into a situation that could leave you in debt?
Before choosing your first apartment, you may want to consider your savings, regular income, ongoing bills and upfront costs for moving. Taking into account each of these factors can help you determine what you can afford.
When it is time to get your own apartment, it may help to have some savings on hand.
You may need to plan to save for several months before moving so you can better afford upfront costs, as well as monthly payments, says Maria Salova, social media coordinator at ForRent.com. It’s a good idea to save the equivalent of three months of rent before you move to cover your security deposit, first month of rent and have some money left to put aside, adds Realtor.com.
You may want to get a big, updated apartment in the most popular part of town, but can you afford it? You’ll want to consider what portion of your income you want to spend on rent each month.
As a standard rule, look for an apartment that costs no more than one-third of your gross income, says Salova. Forbes suggests allocating another third for other bills and necessities and the rest for saving, investing and entertainment.
Salova says you should start by tallying up all of your current monthly living costs, such as car insurance and groceries. Once you have your total, take that amount from your income and put it in your checking account each month, Salova says. Anything you earn in addition to those expenses should go into a savings account.
When creating your first apartment budget, don’t forget about upfront costs.
Expect your first month to cost twice as much as the ones that will follow, says Salova. “A landlord will likely require a deposit in addition to your first month’s rent, but how much more will vary,” says Salova. “Other upfront expenses include: application fees and pet deposits, electricity and gas (there are usually fees to start accounts with both), Internet and, of course, moving costs.”
Depending on how much you have to move, your moving costs will vary, says Salova. If you have a friend with a truck who can help, moving may only cost you the price of a lunch or dinner. On the other hand, if you have to hire a moving company, it will cost more. Make sure you factor in the cost of transferring your stuff from one place to another when you create your budget.
And if you’re starting from scratch, don’t forget to factor in the costs of purchasing furniture and other household items.
When you live in your own apartment, you have monthly expenses in addition to rent. Many landlords will require you to pay for your own utilities, Internet and cable, and some may charge a monthly parking or pet fee, explains Salova. Utilities may fluctuate each month based on use, says Salova, but some utility companies can provide an estimated cost for services based on the apartment and region.
When you are getting ready to sign a lease, make sure you account for the full price of living on your own. Budget wisely and planning ahead can help make your first experience as a renter go more smoothly.