While the prospect of finding a new 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 renting an apartment will set you off on a strong financial foundation. The easiest way to prepare financially for renting is to create an apartment budget worksheet.
Knowing how to budget for an apartment can set you off on a strong financial path for life.
The basics of apartment budgeting
There are a few expenses that are crucial to any budget, especially when looking for an apartment:
- Application fees
- Deposits
- Rent
- Utilities
- Moving expenses
How to begin budgeting for an apartment
By creating just a few basic categories for your expenses, you can simplify your financial management and make budgeting feel simpler.
The best way to get started is to create a worksheet in a notebook or an online spreadsheet. 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.
Using a specialized rent calculator can also help with how to budget for an apartment. These calculators typically take into account location, household income, pay period and monthly expenses to see how much you can afford to spend on rent.
Creating 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.
- Debt
- Savings
- Food
- Fun and entertainment
If you want an even more simplified way to track your potential spending, make a three column list with needs, wants, and savings. Needs should take up 50% of your spending and include things like housing, wants should take up 30% and include things like travel, and the last 20% should go toward savings.
Estimating your moving costs
A big part of knowing how to budget for renting an apartment is understanding that you are 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.
4. Movers
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. However, if you are moving within the same city, using friends and family to help you move can help you lessen your moving budget.
How much to budget for furnishing an apartment
Once you’ve decided on where you want to live, then you need to think about furnishings. New apartments that are unfurnished need a lot of items, and the costs can add up quickly. 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. You can also ask family and friends if they have any extra items they don’t use anymore. If you want to remove the expense entirely, you can always choose to rent a furnished apartment.
Saving for your 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.
Learning how to budget for an apartment is a skill set that can help you in many aspects of life. The skills and tricks you learn during the budgeting process will help you become a wiser real estate consumer.
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.
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