Table of Contents
- 1. Make Sure that the Apartment Rental Cost Does Not Go Over 25% to 30% of Your Monthly Income.
- 2. Set Aside Money for One-time Moving Expenses.
- 3. Allocate Money for Recurring Expenses.
- 4. When Choosing an Apartment, Consider How the Location Will Affect Your Other Expenses.
- 5. Choosing an Apartment with Free or Built-in Amenities Could Save You Money.
- 6. When Buying Furniture and Appliances, Prioritize Need Over Want.
- 7. Create an Apartment Emergency Fund for Unexpected Expenses or Situations.
- How To Budget For An Apartment Made Easy
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You’ve finally decided that it’s time to move into an apartment on your own. This can be a very exciting time because it means you can have the space all to yourself. But such a decision can also be really expensive. If you’re not careful, you could end up spending more than your paycheck on rent alone and barely have any money left for anything else.
Before you can start packing your boxes or shopping for furniture, you’ll need to get ready for the financial responsibilities of living alone. It’s important to know how much money you’ll be spending each month and what expenses are included in this rent.
To help guide readers through the process, we’ve created this blog post about budgeting for an apartment. With these practical tips, you can keep yourself from going broke while enjoying your new home.
1. Make Sure that the Apartment Rental Cost Does Not Go Over 25% to 30% of Your Monthly Income.
Renting a place is not cheap and it’s easy for your hard-earned money to go fast if you don’t plan ahead. But with some careful consideration and planning, it is possible to live comfortably within your means in a new rental property.
So how to budget for apartment expenses? The first thing you need to consider is how much rent you can afford. Apartment rental costs vary depending on what city or town it’s in. However, there are some things to consider before signing any lease agreement.
A good rule of thumb is making sure that your monthly rent does not exceed more than 25% to 30% of your gross monthly income. The higher this percentage goes, the harder it will be for you to afford living expenses such as groceries, utilities, and other housing costs. You might be tempted to get an apartment way above your budget but remember that if you can’t make the rent, you’ll have to move anyway. Even if you can pay the rent but have to scrimp and be overly frugal to keep up with the payment, what quality of life will you have anyway?
If you’re planning to live with other people to help pay the rent, make sure that you have talked to these people beforehand or that it’s an area where there is a high demand for rooms. You don’t want to sign a lease that’s more than you can afford only to find out eventually that you can’t find a roommate. In this case, it’s better to find an apartment that you will be able to pay for on your own.
How much money should I save before moving out? This is a common question for people wanting to get a new apartment. Having at least 3 to 6 months of advance rent is a good start but aside from this, you also have to budget for other expenses. These expenses will be discussed in the following sections.
2. Set Aside Money for One-time Moving Expenses.
If it’s your first time moving into your own apartment, you might not realize that there are one-time expenses that you have to cover aside from the monthly rental cost. To help make sure your finances stay in order, set aside money for these types of expenses.
Some examples of these expenses include security deposits, moving truck fees, renter’s insurance, and administration fees. There may also be fees and deposits required to connect utilities like electricity, water, internet, cable, etc.
A lot of times, the costs of these one-time expenses such as security deposits make it difficult for people to move into their own apartments. Before you choose an apartment, clarify with the owner or agent about these costs. Make sure to get the exact amounts so you can include them in your budget.
3. Allocate Money for Recurring Expenses.
One of the most important things to do when moving in is to allocate money for recurring expenses. Some of these include electricity, water, internet, and gas. It’s easy to overlook these recurring expenses when you’re just planning to rent an apartment, but it’s important not to forget these things when budgeting for your new home. Make sure you allocate money for these things that may be needed on a monthly basis. If you don’t plan on them they can really catch up with you quickly.
Aside from the basic utilities, you also have to budget for other associated expenses that you may have to pay for. For example, some renter’s insurance has to be paid monthly. Or other apartment buildings require monthly fees such as maintenance fees, security fees, garbage collection, parking fees, etc. Take these fees into account and make a checklist for total apartment expenses. You might be thinking that the rent is low but when you add these fees on top of the rental fee, you might end up with a total that’s beyond your budget.
And oh, don’t forget you also have to eat and use other groceries? Living with parents all the while thus far may make it easy to forget how much food and groceries cost. Include a realistic budget to cover these as well. Welcome to the real world!
4. When Choosing an Apartment, Consider How the Location Will Affect Your Other Expenses.
In many places, apartments that are located in city centers or downtown areas are often more expensive than houses in the suburbs or outskirts of the city. If you’re tight on budget, the easy choice would be to go for a cheaper apartment even if it’s in a faraway part of town. However, it’s also important to consider how the location of your new place will affect other expenses such as transportation and grocery shopping.
Check how far the apartment will be in relation to your work. What are the nearby amenities? Is there anything within walking distance or close by that can offset some of your transportation costs like groceries or restaurants? You may be saving money on rent but if it is in the middle of nowhere, you could end up spending a lot of money and time on transportation costs just to get your basic needs or get to work. Calculate these costs in advance to see whether it will be more practical to rent an apartment that is a little more expensive but closer to amenities.
5. Choosing an Apartment with Free or Built-in Amenities Could Save You Money.
When choosing an apartment, the cheapest one is not always the best one. Sometimes, more expensive apartment units offer extra amenities. When looking for an apartment to rent, look for these offered amenities that are already included in the rent. Again, make sure that you will not be paying extra for these.
These amenities can be community amenities shared among the building residents. Some examples of amenities include a swimming pool, gym or fitness center, playground, clubhouse, media rooms, laundry areas, and gardens. There are also in-unit amenities that can be found inside your apartment unit such as in-unit laundry, dishwasher, air conditioning/heating, dishwasher, kitchen ovens, and refrigerators.
How can these amenities save you money? Let’s say you usually spend money for laundry and gym membership on a monthly basis. If the apartment offers a free gym for residents and in-unit laundry, you can save the money you usually spend on these things. However, if you’re choosing between a cheaper apartment with no amenities and a more expensive one with amenities, calculate the difference to see whether it makes sense to go with the more expensive unit or if it will still be cheaper just to do your laundry and get a gym membership outside.
6. When Buying Furniture and Appliances, Prioritize Need Over Want.
Many first-time apartment renters get too excited about furnishing and decorating their own apartment often spending more money than they can afford. If you’re considering moving to a new apartment, you probably have a Pinterest board with all your decorating ideas pinned by now!
While there’s nothing wrong with wanting your new home to look its best, you also have to consider your finances. Imagine spending all your hard-earned money to buy an expensive couch or coffee maker, only to realize that you don’t have enough left to pay for next month’s utilities.
A good tip is to prioritize your needs over your wants. List down all the basic items necessary for your everyday living. Buy these items first before you splurge on décor or items that are not functional. You can also spread out your expenses over a few months so that it will not be too difficult for you. This is a good option if you need to move urgently but your funds are limited.
For example, buy the necessary furnishings and appliances on month 1 such as the cooking stove, refrigerator, AC/heating, bed, and mattress. You can then buy décor in the following months to slowly furnish and complete the look of your place.
7. Create an Apartment Emergency Fund for Unexpected Expenses or Situations.
An emergency fund is an amount of money you save up for unexpected situations such as losing your job or medical expenses. It is also advisable to have a separate apartment emergency fund for unexpected expenses like when the washing machine breaks or if your roommate suddenly goes missing.
A good starting point is having one month’s worth of rent saved up in the bank. However, it is advisable to save up three months to six months’ worth of rent. This will ensure that you’re covered even if you don’t have income coming in.
How To Budget For An Apartment Made Easy
Venturing out on your own and getting your own apartment is an important milestone. At the same time, it will also affect your finances significantly. Following these tips could help you make this process much easier so you can successfully move into your new place without breaking your budget.