Before moving out on your own, it's a good idea to calculate the costs of moving into your first home or apartment to make sure you can afford the monthly costs and fees. Here, we provide the ultimate guide to preparing financially, including the main things to consider when determining your moving budget.
How Much Can You Spend Each Month on Rent?
One of the first steps in moving out on your own is to ensure you have enough money to make the dream a reality.
You need to not only look at what is required for the first few months but that you're able to sustain your new lifestyle for a year or more. It means taking a realistic look at your budget and what you can afford in terms of rent or a mortgage.
The best way to do this is to place your net income into one column and in the other column list your potential expenses. Expenses include rent, utilities, parking, transportation costs, food, entertainment. If you're unsure how much you need, write down everything you currently spend - and I mean, everything - for a two-week period. Don't scrimp because you're keeping track. Remember, if you want to uphold your current lifestyle, the amount you spend during the two weeks, times two, is what you'll need to live on for a month. If you don't know what it will cost for utilities, call your local providers. Ask them for a ballpark figure for the size of apartment you'll be seeking.
Most companies will give you estimates. Add this to your expenses.
If you haven't been paying for your food, toiletries, haircuts, etc..., make sure you add this in. Food bills tend to be more expensive than you think. Try it for a week, then times that by 4 weeks and add it to your expenses.
Once you've tracked and documented your expenses before rent, add in a 5 percent contingency (just to be sure), and leave some for your savings account, then deduct your total expenses from your net income to see what remains of your paycheck.
Do this for a one-month period. You should have a pretty good idea what you can spend each month on rent.
How Much More Will You Need?
Fist, whenever you're looking at a potential apartment to rent, there are some key questions you need to ask the landlord. Get a list of these essential questions right here.
Most apartments/houses for rent require both first months' rent and last months' rent when you sign the lease. So even before you move-in, you'll already need to double the amount you'll be paying each month.To be safe, you should always have at least three months worth of rent, and living expenses in your savings account to cover emergencies.
It varies from building to building. Some places will require anything from $500 to an additional months' rent. Ask before you sign the lease. Also, make sure you're clear on what is considered damage versus day-to-day wear and tear.
If you are moving with pets, a pet deposit is becoming more common. These monies are in place to pay for any damage or loss of revenue to the building owner due to animals on the property. Again, ask your landlord what they consider "damage or loss of revenue" to ensure you receive the full amount when you move out.
Most utility companies will require a deposit if you've never had an account with them before. Also, if you're setting up utilities for the first time in a new place, there is usually a "hook up" fee or administration fee. Ask before you move to make sure you include this amount in your budget.
It's also a good idea before you sign a lease to shop around for apartments that include utility costs in the monthly rent. All inclusive rents can save you money, especially if you live in a cold climate where heating costs cannot necessarily be predicted. It is also a good idea if you're looking at moving into an older building or house. Older structures tend not to be as well insulated and can end up costing you a fortune.
If you require parking, some apartments will charge you double the rental space amount to cover the first and last months' rent.
So, if it costs $30 per month, they may charge you $60 upfront. If your building has free parking, yet you don't have a car, ask your landlord about their policies regarding renting the space. It is a great way to earn some extra income, especially if you're in a business area or a residential area with limited parking available.
If you require parking and your building does not have any, you'll need to call the city office to determine how you obtain and pay for a street parking permit. Again, costs vary, but in the long run, it will be cheaper to obtain a permit than to pay for parking tickets.
There are so many things you'll need in your first home. These things may seem small and trivial, but their costs can add up quickly. So, to make sure you're covered, get out your notepad (again) and make a list. Go through each room and think about the things you need on a daily basis. Don't leave anything out! For instance, in the kitchen make sure you include small appliances, pantry supplies, spices (these add up), dishes, flatware, towels, soap, dish rack, food staples, pots and pans, containers, garbage can, etc.
If all these things leave you a little breathless, you may want to throw yourself a "moving out" shower. And why not? We've all been to bridal showers or baby showers or have given presents at weddings, so why not throw a party and ask your guests to bring just one item for your new home? It doesn't have to be anything expensive, just something useful. Make a list of things you need and send it with the invites. It's a fun and effective way to make your move a success and most people will be happy to contribute.
Now that you have all your finances in order, you've taken the first major step in moving. Congratulations! Now, dig out those rental ads, start circling, viewing and hunting for just the right place, knowing that you can afford it. And above all, have fun!