Moving into your own place for the first time can be an exciting step in your life. But before you start looking for furniture ideas on Pinterest or picking out the perfect paint color for your walls, you may need to take a step back.
Living on your own comes with new expenses, so you must prepare your finances ahead of time. Independence is a fantastic thing, but enjoying that new freedom can be more expensive than you think.
One of the most common questions I hear is, “How much money do I need to move out on my own?” The answer to that question depends on many different factors. Here are a few tips and things to consider to prepare your budget in the best way possible.
It’s essential to take an honest look at how much you can afford to pay toward rent or (if you’re buying a home) a mortgage. As a rule of thumb, you should aim to keep your rent payment close to 30% of your pre-tax (aka gross) monthly income.
For example, if you earn $2,500 a month before taxes ($30,000 per year), you want to keep your monthly rent payment close to $750. That could be tough in certain parts of the country. In Washington, where I live, the average rent price in the state is reported to be $783 for a 1-bedroom apartment. But in California, the average rent reportedly jumps to $1,136 for an apartment of the same size. (https://www.rentdata.org/states/washington/2019)
If you have trouble finding a rental that doesn’t cost more than 30% of your gross income, you may need to consider some alternative solutions. You might consider taking on a roommate to share expenses. Renting a room from someone else could also reduce your cost significantly.
You might decide to spend more than 30% of your gross income on rent. Just be aware that you may need to cut expenses in other areas to make up for the higher rent payments.
If you decide to pay more than 30% of your income, there’s a catch. A landlord will want to be sure you can afford the rent. Many landlords require your monthly income (plus your roommate’s income) to be double or triple the size of your monthly payment.
Want to rent an apartment that costs $1,200 per month? If the landlord requires income that’s three times the rent, you and your roommates would need to earn at least $3,600 per month combined to qualify.
Before you move, there are some initial expenses you should save for first.
Your credit can be a big deal when you apply to rent an apartment or home. So, it’s smart to check your three credit reports before you move out.
Credit reporting errors happen. If they happen to you, they could lower your credit scores and make it harder or more expensive to rent a place to live.
You can check your credit reports for free once every 12 months at AnnualCreditReport.com. It’s also easy (and often free) to check your credit scores online using Credit Karma.
If you find errors on your credit reports, federal law gives you the right to dispute those mistakes. You can learn more about how to dispute credit errors in this guide.
Many young people move out on their own and try to wing it when it comes to money management. This is a mistake. (Trust me!)
Living on your own can come with expenses you may not be used to paying, such as:
Those new expenses will pile on top of debts and monthly obligations you already owe. Not sure where your money is currently going? Try tracking your expenses.
It’s smart to start using a budget before you move out on your own. A budget can make it easier to reach your pre-move savings goals. Getting used to a budget now can also help you in the future when you start adding new expenses to your plate.
It will help if you start by finding the right budgeting method for you. Personally, I use the Budget By Paycheck Workbook to manage my money. I created the budget-by-paycheck method after I tried and failed at countless other budgeting approaches for years.
The budget-by-paycheck method changed my life. I paid off over $77,000 in debt. I went from being financially stressed and overwhelmed to being debt-free with extra money in the bank.
Moving out on your own for the first time is a big, exciting step. Understandably, you might want to rush the process.
But if you take the time to prepare in advance, it could save you in the long run. The last thing you want to do is get overwhelmed, break a lease, and move back in with loved ones while you regroup and try again.
The first step in the moving process starts before you actually move. Make sure you have a successful working budget in your life so you can gauge what you can realistically afford. Be patient in the process so you can set yourself up for success.
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I sold my condo in 2016 and only apt. I could find at that time was $1200.00 a month for a two bdrm (not including utilities).. Only needed one but none was available and needed to be out of house. Am retired and on Soc. Sec. and my income had to be twice what my rent was. Credit was ok but son still had to co-sign for me to rent apt. also had a $600,00 pet deposit besides other deposits. All in all…Thank God for my son . I was 80 years old…it was like starting over until I was able to get into a low cost Senior Apt. that is HUD protected and now it IS 1/3 of my income, utilities included I had to wait 2 years for this apt. and I love it. It is 600 sq. ft. and I have ample room for self and cat. My family jumped in and moved me 1st time…and 2nd time when I moved to this apt. but we hired movers through church. God Bless them ALL!