How to Budget for Your First Apartment
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 struggling to pay your rent?
Before choosing your first apartment, you may want to consider your savings, income, ongoing bills and upfront costs for moving. Taking into account each of these questions can help you determine what you can afford.
- How much savings do I need before getting my apartment?
- How much rent can I afford with my income?
- What upfront move-in costs should I expect?
- What ongoing apartment expenses should I consider?
How Much Savings Do I Need Before Getting My Apartment?
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 Mint.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 Forbes.
How Much Rent Can I Afford With My Income?
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 income, says Forbes. Consider allocating another third for other bills and necessities, such as loan payments, food and utilities, while the rest should go toward savings, retirement and entertainment costs, notes Forbes.
What Upfront Move-In Costs Should I Expect?
When creating your first apartment budget, don’t forget about upfront costs. Expect your first month to cost more than you expect. According to Forbes, you may often pay a security deposit in addition to first and last’s month rent before moving in. Some other upfront expenses include: pet deposits, move-in fees, renters insurance and utility deposits, according to The Balance.
Moving often costs more than you might think, says U.S. News and World Report. 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, says U.S. News and World Report. 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, adds Forbes.
What Ongoing Apartment Expenses Should I Consider?
When you live in your own apartment, you have monthly expenses in addition to rent. According to Zillow, utilities like electricity, heat, air conditioning, natural gas, cable and Internet roughly cost about 20 percent of your rent. You’ll want to factor that into your overall budget, too.
There are a number of online affordability calculators that can help you during this budgeting process. For example, Zillow’s Rent Affordability Calculator can help you determine your price range. Another calculator from First Apartment Guide can be useful in calculating additional factors, like splitting the rent with roommates.
When you are getting ready to sign a lease, make sure you account for the full price of living on your own. Budgeting wisely and planning ahead can help make your first experience as a renter go more smoothly.
Originally published on May 25, 2015.