While the prospect of getting your first apartment is very exciting, it can also seem a little overwhelming because you’re not sure what to expect financially. This might be the first time you’ve had to carefully budget your money, which is definitely an adjustment. Knowing how to estimate your moving costs and create a budget for living in rental accommodation will give you a solid financial base in your first apartment. The easiest way to financially prepare for renting is to create an apartment budget spreadsheet.
How well do you know where your money is going right now? Many people have only a vague idea of how their paychecks are actually spent. Learning how to budget effectively before getting your first apartment can put you on a solid financial path for life.
Start by following the current monthly budget
Many people avoid budgeting because it feels overwhelming to them. By creating just a few basic categories for your expenses, you can simplify your financial management and make budgeting manageable, even if you’re not a math whiz.
The easiest way to create a budget template is to create a spreadsheet in a notepad or an online spreadsheet, whichever you prefer. In the model, track every dollar you spend for a full month. Use three columns and record the date, a name or description of the expense, and the total amount spent. At the end of the month, separate that list of expenses into these seven categories and count the total amount spent in each area.
- Rental: You can currently pay rent, but it can be significantly less than the cost of an apartment.
- Utilities: Utilities are monthly necessities including your cell phone, electricity, gas, and internet.
- Monthly expenses: These are other monthly charges such as the price of the bus or gasoline, car insurance, car payment, health insurance, etc.
- Debt: Includes credit cards, student loans, and other loans or debts.
- Savings: Savings accounts are useful for things like annual expenses like car registration fees, building up funds for expensive purchases, or other unforeseen expenses. Moving expenses can also come from this account.
- Food: You may want to calculate restaurant meals separately from home meals when budgeting.
- Fun and entertainment: It is important to save money for fun and entertainment.
You cannot have expenses in each of these categories at this time. However, sorting your expenses into these categories can help you identify the changes you will need to make in your budget as you prepare to pay for an apartment and its associated costs.
Create an apartment budget worksheet
Once you have created a journal of the current spending of your money, create another budget for your planned spending when you rent an apartment. This helps you see the necessary budget adjustments when you move into a rental. Place this estimated budget next to your current budget and compare each category, one by one, to identify areas of spending that need changes.
- Rental: Financial advisers recommend that the rent not exceed 35% of take-home pay.
- Utilities: In addition to your cell phone, you may need to pay for other utilities such as electricity or water, depending on your rental agreement.
- Monthly expenses: Once you rent an apartment, it’s important to take out tenant insurance in addition to any other monthly expenses you already have.
- Fun and entertainment
How to estimate moving costs
Moving into an apartment will incur a number of one-time costs. It is very important to prepare financially in advance before your move, in order to alleviate additional monetary stressors.
1. Application fees
It is common for an owner to charge a non-refundable application fee in order to identify serious applicants. The average application fee is $ 100, so this should be part of your estimated moving costs.
2. Security deposit
The standard security deposit is one month’s rent, but some landlords charge the first and last month’s rent. If there is no damage during your move, you will receive your security deposit. Your lease will list specific requirements for your security deposit.
3. Moving truck
You may need to hire a moving truck if you are traveling a long distance or have a lot of large furniture to move.
If you are moving across the country or have a lot of bulky and heavy furniture, you may need to hire movers to help with the move.
5. Furnishings of your new apartment
When you move into your first apartment, the list of furniture and household items you need can seem endless. You will need furniture, dishes, silverware, kitchen utensils, linens and various other items to furnish your apartment. There are many ways to furnish on a budget, such as buying used furniture and shopping at resale stores. If you want to eliminate the expense entirely, you can always choose to rent a furnished apartment.
Save for your first apartment
Review your current monthly expenses. Once you move out, a significant portion of your income will likely be spent on rent. Where is the largest percentage of your money going today? How can you reallocate this expense?
One of the best ways to save for your first apartment is to pretend you’re paying rent now. Put this money in a separate savings account, so that you cannot easily access the money in your debit account. If you do this for three months, you can save a one month security deposit and most of your moving costs. You’ll also have adjusted to living on a budget, so moving into your first apartment and managing your money won’t be a dramatic adjustment for you. If after doing this your budget plan still seems tight, you may want to consider finding a roommate for your first apartment to split the expenses in half.
Start your search now and give yourself a little leeway to find the right place. Browse thousands of apartments for rent on Zumper and find your new home.