Saving up for an apartment involves many variables. You must consider your income, expenses, location, and the expected monthly rental cost. There are also different apartments types and sizes. It is not easy to estimate the amount you should save for an apartment.
How Do You Decide On The Amount To Save For An Apartment?
Several factors help decide on the amount to save for an apartment. If you live alone and want to rent an apartment for the first time, your savings need to be a bit higher. It is because you need furniture, kitchenware, among other household stuff. It would be best if you took time to think about the amount you spend on everyday things like gas and groceries. Some of the things that could help in such decision making include;
Your Income
Apartment owners are very keen on who they rent their house. Recently, they prefer individuals who earn at least four times their rental cost. It helps avoid future cases of delayed payments. When looking for an apartment, ensure you have a steady source of income. Doing so enables you to maintain a calm mind after moving in. You do not need regular reminders of late payments from landlords. The best way to avoid such embarrassments is by dividing your income source by three. A third of it should be enough to pay the rent without straining.
When your income is involved, make sure you go for an apartment you can effortlessly afford. For those without a regular income, ensure to save enough rental money for at least four months. There are also alternative apartments where income requirements are not mandatory. They should consider them as their best option.
Moving Costs
Moving into a new apartment is not a walk in the park. Not only do you need rent money, but also the associated expenses such as moving costs. There are two options when moving costs are concerned. Either you get a full-service move or a moving truck rental. With the moving truck rental, you get a truck to carry your stuff and do the rest yourself. You can recruit a few of your friends to help with the activities. Depending on the moving company, such will cost you around $40 to $150.
For full-service movers, the associated cost is slightly higher. The prices range between $300 to $600 within a city in most cases. You find it the best option, especially if you have some nice stuff you want to protect from damage. Only go for this option if it was in your expenses plan. It is not the best choice if you want to save a dime.
Down Payment
Securing an apartment does not just involve you paying the rent. You need to put up a security deposit with the owner. Most owners request an amount equal to the rental cost. Sometimes it is refunded during move-out after a full credit and ground check. If there are unexplained damages to the apartment, you do not get the money.
In most cases, down payments are reminders to tenants to maintain their rented space. Protect them from unnecessary damages. Ensure to have double the first month’s rent to secure yourself a rental apartment.
Utilities And Furniture
The estimated monthly utility cost is about $200 per month if you are living alone. This cost includes web streaming services, internet, heat, electricity, and renter’s insurance costs. If you decide to share the apartment with friends, it could greatly reduce the costs. You cannot cut down on most of these utilities, especially the renter’s insurance. It is mandatory in all rental units.
In most cases, the insurance rate is about $150 per year. With this, you protect yourself from flooding, fire, or possible break-in in your apartment. It helps you recover from such losses by repossessing your items.
Furniture is available depending on the money you have. Consider putting furniture cost as part of your savings requirements if you are starting up. It might not be much, but it is still an expense. With as low as $500, you can find companies to furnish your house. You are just starting up, and you do not need a lot. After all, it is easier to buy décor pieces after settling in. Remember to spend an amount you are comfortable with to avoid future straining.
The Table Below Summarizes Some Basic Costs And Savings Required Of Moving To An Apartment;
| Salary | 45,000 |
| 1st month’s rent | $11,000 |
| Security deposit | $11,000 |
| Basic furniture | $500 |
| Moving cost | $500 |
| Miscellaneous (utility deposits, renters insurance, credit check fees) | $650 |
| Total | $24,050 |
How Do You Budget And Save For An Apartment?
When savings and budgeting for an apartment are concerned, setting goals and discipline is all about. They both go hand in hand. You must have a budget to know what and how you will save. It involves setting goals and limits. You plan where you will spend every cent. You can easily decide on the amount to save for an apartment with such plans.
When budgeting, the first alternative is using the 20/30/50 rule of thumb. This is a technique most people use to distribute their income. The rule involves the ratio you can use your income for savings, needs, and wants. In the rule, 20 percent goes to the savings for your apartment, 30% is for all wants while 50 % serves the needs. Ensure you don’t confuse your needs with wants.
They are the absolute essentials to your life with needs, and you can’t do without them and include things like food and clothing. On the other hand, wants are luxury items like cars and are not a must-have. When saving for an apartment, cutting on the wants is the first way. The remaining 20 percent goes to savings for other needs.
Does The 30% Rule Of Thumb Hold When Saving For An Apartment?
The 30% rule involves paying rent that is not more than a third of your salary. Your rental cost should not be more than thirty percent of your monthly income. It only applies when you have already moved out in an apartment. Saving for one depends on many factors like down payment and moving costs. It is also very expensive compared to paying monthly rent. For this reason, the 30% rule might not apply when saving.
Another reason it does not apply is because of the many spending options in recent times. Some include paying for credit/debit cards, student loans, retirement investments, and emergency funds. These things have become mandatory, making it difficult to hold up the 30% rule. There are also unexpected rent increments, making it difficult to hold up a fixed rental cost.
How Can You Reduce Your Apartment Rental Cost?
Moving out gradually in a new apartment requires you to have a lot of savings. You need upkeep money for groceries, toiletries, and other basic items. Other costs include catering for the moving costs, furniture, and décor. However, if you do not have enough money to pay for all these, you can use the following tips to cut the costs;
Consider A Smaller Apartment
Townhomes and basements apartments are cheaper than one and two-bedroom ones. You can opt for these while saving to move out into a new apartment. From there, you can buy necessary furniture and décor as you continue saving up for a bigger place.
Reside Near Your Social Life And Workplace
Living close to where you work helps to cut down on transportation costs, especially when commuting to and fro the workplace. For this option, you weigh the advantages and disadvantages of your preferred location to suit your budget. For example, if living near your workplace saves you transport costs, it is better to go for it. You will save more for a better apartment with better features.
Go For Apartments In The Outskirts Of Cities And Suburbs
Due to high demand with low supply, apartments tend to be more expensive in major cities. On the other hand, utilities and rent are cheaper in the outskirts, making it easier to save and move into your apartment.
If possible, you can also opt to live with roommates to reduce your rental costs—homeowners per unit issue utility costs. Sharing a unit translates to a division of associated expenses. It makes it easier for a person to move out to a new apartment as they do not have to carry the whole moving out the burden. You also split the monthly rent, saving more while enjoying the apartment.
Conclusion
How much you need to save up for an apartment depends on different factors. For example, the location, associated moving costs, utility cost, and down payments required. There are also different apartments types and sizes. Larger ones with two or three bedrooms tend to be more expensive than basement and townhouses. When saving for one, ensure you have the details of the requirements to avoid future disappointments of lack of enough rental fees.
