While the prospect of getting your first apartment is very exciting, it might also feel somewhat overwhelming because you’re not quite sure what to expect financially. This may be the first time you have to carefully budget your money, which is certainly an adjustment. Knowing how to estimate your moving costs and create a budget for living in a rental will set you off on a strong financial foundation in your first apartment. The easiest way to prepare financially for renting is to create an apartment budget worksheet.
How clear are you on where your money is going right now? Many people only have a vague idea of how their paychecks are actually spent. Learning to budget effectively before you get your first apartment can set you off on a strong financial path for life.
Start by Tracking Current Monthly Budget
Many people avoid budgeting because it feels overwhelming. By creating just a few basic categories for your expenses, you can simplify your financial management and make budgeting feel manageable — even if you aren’t a math prodigy.
The simplest way to create a budget template is to create a worksheet in a notebook or an online spreadsheet, whichever you prefer. In the template, track every dollar you spend for one full month. Use three columns and log the date, a name or description of the expense, and the total amount spent. At the end of the month, separate this list of expenses into these seven categories and tally the total amount spent in each area.
- Rent: You may currently pay rent, but it might 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 costs such as bus fare or gasoline, car insurance, car payment, health insurance, etc.
- Debt: Includes credit cards, student loans, and other loans or debt.
- Savings: Savings accounts are useful for items such as annual expenses like car registration fees, accumulating funds for costly purchases, or for other unforeseen expenses. Moving costs can come from this account as well.
- Food: You may want to calculate eating out separate from dining at home when budgeting.
- Fun and entertainment: It’s important to have money set aside for enjoyment and entertainment purposes.
You may not have expenses in each of these categories at this time. However, sorting your spending into these categories can help you identify the shifts you will need to make in your budget as you prepare to pay for an apartment and its related costs.
Create an Apartment Budget Worksheet
Once you have created a log of where your money is currently spent, then create another budget for your anticipated expenses when you rent an apartment. This helps you see the budget adjustments necessary when you move into a rental. Place this projected budget next to your current budget and compare each category, one by one, to identify spending areas which need modifications.
- Rent: Financial advisors recommend rent doesn’t exceed 35% of take-home pay.
- Utilities: In addition to your cell phone, you may have to pay other utilities such as electricity or water, based on your rental agreement.
- Monthly expenses: Once you rent an apartment, it’s important to purchase renters insurance in addition to any other monthly expenses you already have.
- Fun and entertainment
How to Estimate Moving Costs
Moving into an apartment is going to incur a number of one-time fees. It’s very important to prepare financially in advance before your move, to alleviate additional monetary stressors.
1. Application Fee
It’s common for a landlord to require 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 first and last month’s rent. If there are no damages when you move out, you will receive your security deposit back. Your lease will list the specific requirements regarding your security deposit.
3. Moving Truck
You may need to rent a moving truck if you are moving a long distance or have a lot of large furniture to move.
If you have are moving cross country or have a lot of large, heavy furniture, you may need to hire movers to help you relocate.
5. Furnishing Your New Apartment
When moving into your first apartment, the list of furnishings and household goods you need may feel endless. You will need furniture, dishes, silverware, cookware, linens, and various other objects to set up your apartment. There are many ways to furnish on a budget, such as buying used furniture and shopping in resale shops. If you want to remove the expense entirely, you can always choose to rent a furnished apartment.
Saving For Your First Apartment
Review your current monthly spending. Once you move, a significant portion of your income will likely be going towards rent. Where is the largest percentage of your money going today? How can you reallocate that expense?
One of the best ways to save for your first apartment is to pretend you are paying rent right now. Put that money into a separate savings account, so you aren’t able to easily access the money from your debit account. If you do this for three months, you can save up a one-month security deposit and most of your moving costs. You will also have adapted 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 consider getting a roommate for your first apartment to split the expenses in half.
Start your search now and give yourself a little wiggle room to find the right place. Browse thousands of apartments for rent on Zumper and find your new home.