The thought of moving out of your parents’ home into your own place is an exciting prospect! But moving into a rental property does come with its challenges. Most first-time renters don’t realize how expensive it can be to live on your own, even if it’s a small studio apartment.
It’s important to budget for apartment living before you begin your search and move into a new property. There are a lot of rules and regulations to follow as a tenant renting an apartment, including terminating your lease agreement mid-term.
Take a word of advice and prepare yourself for the next big step in your future by budgeting appropriately:
How to budget for an apartment?
Whether you’re a first-time adventurer or a seasoned renter looking for a new place, you need to establish a proper budget. Understanding how much money you need for certain expenses will also make it easier to find a fitting apartment within your budget on the first try. Putting together a budget may seem daunting, but don’t skip this step as it will make your life much easier in the future.
Make a list of your monthly expenses
If you were previously living with your family or had roommates, and are now living by yourself, you might be surprised at the number of additional expenses you’ll have. Groceries and gas are obvious expenses, but tenant insurance, phone and cable are necessities that quickly add up in a month.
Not all rents include utilities (more on that later), therefore that may be another cost to consider. As you’re touring rental properties, ask the landlord if there is a fee to have a pet (provided the building allows pets), as well as for parking and storage lockers. These should be included in your lease agreement as well, but it can’t hurt to clear up every detail before you’re handed the contract.
The best way to come up with a list is to examine your lifestyle. Think about how you live your life, and write down everything you spend money on. For example, if you have a car and plan to commute to work, factor in the price for gas, car insurance and annual maintenance costs. If you eat out regularly, don’t forget to add the amount you spend in a week or a month.
Be detailed in creating your list; you’ll have to divide your budget accordingly in order to pay all of your expenses on time.
What’s left after you’ve paid the rent?
Once you have a list of expenses drawn up, you’ll have a better idea of what you should expect to pay for as a tenant. Take what you expect to pay in a month (including rent) and subtract it from your monthly income. What’s left will help you determine if you’re ready to move out, if you should look for a less-expensive place, or if getting roommates is a better financial option.
Your budget has to be flexible, as things will change once you’re living on your own. That’s why it’s important to have enough money left once your bills are paid – you never know what might come up!
First and last month’s rent
Moving into your first condo or apartment comes with a lot of initial costs. For starters, you might be required to provide your landlord with first and last month’s rent, plus a security deposit. A security deposit will cover any potential damage to your unit after moving in. First and last month’s rent is used to cover the last month you live in an apartment, or repairs to any damage to the property upon vacating the premises.
Keep an emergency fund
After you’ve paid your living expenses, you should set aside a little bit of money in a savings or emergency fund. Even though you’re renting and won’t have to worry about general repairs and maintenance, unexpected living costs can come up at any time. Perhaps you’ll decide to invest some money in upgrading your rental property, or switch jobs at some point and will be spending more money on transportation to get there. You know the saying: expect the unexpected!
Consider the location
As you begin your search for an apartment, there might be certain things you’re looking for specifically. For example, you want an apartment with two bathrooms, or a kitchen with a dishwasher. While amenities are important, the location should be the first thing to consider. Where you live will determine how much money (and time) you spend commuting. If you need a car, you’ll have to budget for gas and parking.
If possible, consider using public transit to save money. Parking spots in an apartment complex can be very expensive.
Don’t forget about utilities
Your utilities bill will include heating, gas and electricity. These basic necessities can also be very costly. Not all apartments will charge for utilities because the expense is often included in the monthly rent, but you should consult with the landlord before signing a lease. The cost of energy adds up quickly!
If you’re paying utilities separately, try doing laundry during off-peak times, preferably after 7PM. Don’t leave the lights on when you don’t need them, and be diligent about unplugging appliances when they’re not in use. When it comes to cooking, use a slow cooker if possible. It doesn’t use a lot of energy, and is great for cooking less expensive cuts of meat. This will help you save lots of money in the long run.
Consider moving in with someone
Reduce your overall expenses by sharing them with a roommate. By moving into an apartment property with someone else, you can share the financial responsibilities, making it less of a burden for both of you.
With a roommate, you can divide the rent, security deposits, and share the bills. It’s definitely a good option to consider before you make the decision to move out.
Moving is such an exciting prospect, but the reality is, you need to consider your financial situation before making a final decision. Create a robust budget so you are fully prepared for what you can afford. This will make the transition that much easier for you.