Moving into your own apartment can be a liberating experience for many young adults. However, it can be difficult to know all the costs associated with moving into an independent environment. The following guide explores how much money you should have saved when moving into a new apartment.
The Cost of Monthly Rent
When moving into a new apartment, it’s important to make sure that you choose a rental unit that doesn’t cost more than one-third of your income. If you have a monthly income of $2400, you shouldn’t spend more than $800 on an apartment. Many landlords will refuse to rent to tenants who don’t have an income that is at least three times higher than rent.
There is a good reason it’s a bad idea to spend more than one-third of your income on rent. Rent on an apartment will only cover the apartment itself. It may include garbage, gym access, and a few other amenities. However, there are a variety of other bills that can add to your monthly expenses.
The Cost of Utilities
In the example above, imagine that you’re spending $800 a month on an apartment. After you rent the apartment, you’ll need water, electricity, gas, and internet access. You may also want to get a cable TV subscription. On average, an electrical bill will run from $100 to $200 a month. A gas bill may run $100 a month (although it will cost less during the summer months). Internet access and cable TV will cost an additional $150 a month. In total, this could add an additional $400 a month in expenses. This means that an $800 a month apartment could cost you $1200 a month.
Other Expenses to Consider
After you’ve added in bills for the apartment itself, it’s time to add in other monthly expenses in your life. If you have a vehicle payment, vehicle insurance, rental insurance, and a cell phone, you could be looking at an additional $600 a month in total.
This means that out of a $2400 income, you’re suddenly looking at $1800 a month in minimum expenses. This doesn’t include gas for your vehicle, food, or entertainment. That $1800 a month is going towards your minimum living and vehicle expenses. If you’re spending half your income on an apartment, this ratio could be even worse.
How Much to Save
It’s a good idea to make sure you have at least six months of money saved in the event you lose a job. In this example, that means it would be good to have at least $10,800 in savings to cover basic living expenses. If you are in a situation where you must move out on your own, it’s still possible to survive on less; however, a bigger safety cushion is always a good idea.
It’s important to remember that expenses can vary based on many factors. If you live in Omaha, Nebraska, you may only need to pay $400 a month in rent. However, if you’re in a large city like Los Angeles or Seattle, you may have to pay as much as $2000 a month for a small studio apartment.