Getting Your First Apartment: Start Saving Now
Getting your first apartment can be a sure sign of successful “adulting” — but it also means you’re responsible for new financial demands. Here are some of the expenses you’re likely to face when getting your first apartment, to help you determine how much you need to save before you sign a lease.
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Research What It Costs to Rent a Place Where You Live
The cost of living in the area where you’ll reside has a significant impact on how much you’ll need to save before getting your first apartment. For example, ABODO reports that, while a one bedroom apartment in Ohio or Indiana may rent for $500 to $700 a month, the same unit could cost more than $3,000 a month to rent in an area like California, where there is a higher cost-of-living.
Regardless of where you’ll establish roots, it’s important to be financially prepared for the costs of your first place before you complete a rental application or sign a lease. Save at least enough money to cover these upfront expenses:
- A rental application fee. This may range from $0 to $50, depending on the landlord and whether the process includes a credit and background check.
- The security deposit. Getting your first apartment may require that you pay a security deposit equal to the first month’s rent, or the sum of the first and last month’s rent (in addition to the first month’s rent). It may be fully refundable once you move out if you leave the unit free of damage, and in the same condition you found it with the exception of normal wear and tear.
- Your first month’s rent. Some landlords may also require that you pay the last month’s rent up front.
Base Your Apartment Search on Your Income
The Center for Housing Policy reports that as rental demand continues to grow, one in four working renters is considered severely cost-burdened, which means that at least half of their income is dedicated to housing expenses. When a person is severely cost-burdened by housing expenses, he may struggle to manage basic lifestyle expenses, and become overly reliant on credit. People who are severely cost-burdened also have difficulty saving money for emergency expenses, shorter- and longer-term goals, and may struggle to pay down debts.
Getting your first apartment will inherently demand that you live within a new budget that includes expenses like utility bills, renter’s insurance and monthly rent. The Joint Center for Housing Studies at Harvard University recommends limiting your housing expenses to less than 30% of your income so you’ll have the financial flexibility to meet your monthly financial obligations, save and avoid debt.
The April 2016 Bureau of Labor Statistics Consumer Expenditure Survey indicates that the average household spends about $4,300 of annual income on residential energy costs and gasoline.
Estimate Utility Costs Before You Choose Where to Rent
The exact amount of your monthly utility bills will depend on whether an apartment’s monthly rent includes any utilities, the condition and efficiency of an apartment’s windows, doors, heating and cooling systems, the climate in which you live and your temperature preferences. Yet, utility bills can take a major chunk out of your budget: The April 2016 Bureau of Labor Statistics Consumer Expenditure Survey indicates that the average household spends about $4,300 of annual income on residential energy costs and gasoline.
Ask the landlord and/or current tenants how much you should expect to pay for monthly utilities when you tour potential apartments. Save enough money to cover at least the first month’s worth of utility bills so your budget isn’t derailed when those first account statements arrive.
Keep Your Home Furnishings Simple to Start
Getting your first apartment is an opportunity to live in a space that reflects your personality — but more decor, furniture and appliances means you must invest more time, effort and, possibly, money into moving them.
Instead of splurging on an apartment full of new furniture before move-in day, start small: Peruse garage sales, flea markets and thrift stores to slowly curate a collection of functional items that reflect your personal style and needs for the space. Eventually, you’ll transform your first apartment into a place that feels like home.
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