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 which fees to include and the main things to consider when determining your moving budget.
First Step: 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. This 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 (income after all deductions) into one column and in the other column list your potential expenses. Must includes are: rent, utilities (heat, electricity, water, cable, telephone), parking, transportation costs, food, entertainment (books, movies, theater/sports/concert tickets, game rentals, dinner out, etc...). If you're unsure how much you need for these costs, 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 this 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 per cent contingency (just to be sure), make sure you 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.
Second Step: 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.
- Rental Deposit: 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 double the amount you'll be paying each month. Also, to be safe, you should always have at least three months worth of rent and living expenses in your savings account. This protects you should any emergency arise, such as unemployment, illness, etc...
- Damage Deposit: This 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.
- Pet Deposit: If you have any 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.
Utilities Deposit: 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're including 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. This 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 utilities are not included, ask the utility company how much you will need to pay for a specific property. If you have a specific property in mind, provide the address and the company may provide you with the average costs per month. Alternatively, the landlord should be up front with you and provide you with monthly statements or average costs for all utilities.
- Parking: 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 up front. If your building has free parking, yet you don't have a car, ask your landlord about their policies regarding renting the space. This 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.