Moving into your first apartment is an exciting step toward a more independent lifestyle.
Whether you just graduated from college, started your first full-time job or decided it’s the right time to leave the nest, one of the first things you will need to do is define your budget.
Why you need a budget for your first apartment
A budget will help you understand how much you can afford to spend on rent each month. That will, in turn, determine the size and location of your first apartment. While the general rule of thumb is that you should aim to spend 30% of your income on rent, this figure will depend on a number of factors, such as the average cost of living in your locality. Your budget should help you to decide on a percentage that best suits your needs and financial goals.
Things to consider when building your budget
The first factor you should know when creating your budget is your take-home pay. That’s the amount of money that goes into your bank account after the deduction of taxes, the cost of benefits and voluntary contributions. That’s the amount of money you have to spend or save each month.
From there, you will need to calculate all of your monthly expenses. Rent is just one cost among many others, including: phone and internet service, groceries, insurance, healthcare, and more. Tally up all of your recurring expenses and subtract them from your take-home pay. The remainder is what you have available to spend on rent or your other savings goals.
As you scope out potential places to live, be sure to inquire about additional fees like security deposits, pet rent, garbage service, etc. You will need to account for all of these expenses in your budget. Doing so will ensure that you are not hit with any surprises when you go to sign the lease.
Check out our infographic below for more tips:
