How To Budget For Your First Apartment

The PropertyClub Team
Jul 2nd 2020
If you're getting ready to move into your first apartment, you're going to want to budget accordingly. This guide will walk you through everything from the most common expenses to calculating how much rent you can afford.

There’s something magical about getting your first apartment. It’s that feeling of knowing that you’re going to have your own place along with your own freedom. Of course, it also means that you’re going to have to go shopping—and not just for that cheap apartment near your job, either. 

Apartment Budget Basics

Getting your first apartment is going to be pricey, and there’s no getting around that. The question is, how pricey does your apartment have to be, how much rent can you afford, and how do you budget for everything? Budgeting for your first apartment is even trickier as you’ll have to factor in additional expenses like furniture and other basic household essentials. This guide will help you with this hot button topic.

First Things First: Find Our Your Monthly Income

You can’t budget for your first apartment without knowing how much money you make. After all, if you put together a budget that requires more than what you make, you’re going to be unable to use it. 

The first thing that you’re going to need to do is to add all your sources of income—hourly wages, tips, investments, as well as any other forms of passive income that you have. This is the income that you level that you’re going to need.

Next: Figure Out Your Expenses

Figuring out your expenses is going to be the hardest part of budgeting for your first apartment. This will require you to do the following:

  • Print out your past three bank statements and look for recurring expenses. You will need to add the cost of your car, credit cards, health insurance, car insurance, as well as any other recurring bills. These bills are considered to be stable and recurring. They will be the base of your budget.
  • Next, check out how much you spend on food and flexible bills. This includes adding up your weekly food expenses, your travel expenses, plus the amount of money you spend on entertainment. Since these bills are flexible, it’s best to set aside more money than you expect to spend. 
  • After that, you’re going to have to factor in your future living expenses. This will include a variety of things, like rent, utilities, internet bills, and renter’s insurance. 
  • Add this all together, and you have your monthly spending budget. If your budget exceeds the amount of money you make, you need to hit the pause button before you move out. If you make more than you spend, you should be good to go in most circumstances.

First Apartment Budget: How Much Can You Afford? 

This is the hardest part for most people to figure out,  but the good news is that it doesn’t have to be too hard. There are a couple of tips that can help you determine how much apartment is really affordable for you:

  • Landlords won’t rent to you unless you make 40 times your monthly rent annually. This is considered to be the bare minimum affordability threshold in most cities. Economists agree that your apartment’s rent shouldn’t exceed more than this, and some say that it shouldn’t even exceed a third of your monthly income. 
  • Take utilities into account. Someone will need to pay heat, water, sewer, electricity, and internet bills. Some apartments will include all utilities in their bills. Others will require you to pay some, while some won’t pay any. You will need to know the apartment’s rules and set aside money for these bills as part of your total rental price. Since these can vary, take the larger estimate that you make. If you can’t afford rent with utilities, you can’t afford the apartment. 
  • Then add in the fees. Most apartments will have pet fees and parking fees that are charged regularly. Add that to the rent and utility price tag.
  • Finally, add in rental insurance. Most small apartments will have renters insurance that costs between $15 and $40 per month. Add this to your price tag, because it is a necessity. 

Once you have the total price tag of rent, add it to your monthly expenses. If you can afford it and still have extra cash left over, then it’s safe to say that you can afford your rent. 

First Apartment Budget- Don’t Forget Your Move-In Costs

Now that you know that your month-to-month will be affordable, you’re going to have to figure out how much your move-in cost will be. Here’s how to figure out your price tags:

  • The Deposit- Most apartments will require a month’s rent plus a security deposit that equals around one to one and a half months’ rent. In many states, deposits are not allowed to be greater than 1 or 1.5 months’ rent. 
  • The Fees- If you got the apartment through an agent, you’ll also need to add your agent fee. Most agents that ask for fees will require a month’s rent as their payment.
  • Guarantors- If you had to use a guaranty company to be able to move into your apartment, you should expect to pay an additional month’s rent (or something close to it) as a part of your move-in fee.
  • Utilities- Most utilities require small deposits as part of move-in. This will be about $200 total in most areas.
  • Pet Deposits- Pet deposits are commonplace among apartments. Thankfully, it’s a one-time deal. 
  • Moving Crew- Whether it’s a van rental or an actual mover crew, you need to budget it into your first apartment. 
  • Furniture- If you don’t have much furniture, you’ll need to put together a list of furniture that you will need. This shopping list can take a while to put together, so if you aren’t sure what you want to bring, grab an apartment checklist.

Last: Additional Costs to Budget For

Yes, the cost of living can be really high. When you’re putting together your budget, make sure to set aside around 10 percent of your income for emergency funds or savings. Should anything happen to you, your emergency fund will be able to make it possible for you to get out of trouble. 

On a similar note, you should also budget for long-term goals and investments. After all, your future matters, too. Making a habit of delaying payments to those goals and accounts will only end up hurting you in the end. 

Is Your Apartment Budget Too Stretched Out?

A common issue that people have when they start budgeting for a first apartment is feeling overwhelmed. Seeing all those bills is troublesome at the very least, and terrifying at worst. At times, you might not feel like it’s possible to move out on your own. 

If this happens, it’s normal to feel a little bummed out. But, you have to remember that desirable city like New York are notorious for being pricey. You’re not alone, but thankfully, there are options out there for you.

These fixes can help you make the most of your apartment budget if you need to use them:

  • Wait a while- Sometimes, you will need extra time to save up enough money to actually move out of your parents’ home or out of your roommate situation. That’s okay! It’s better to be safe than sorry. 
  • Downsize- You might have had your eye on that gorgeous 1-bedroom in a prime neighborhood, but is it really affordable? A studio or a basement apartment might be a better choice. Do you really need to get a loft with a doorman? If it’s not a necessity, opt for a more standard type of living situation. 
  • Let some stuff go- Do you really need a car in a big city? If you think you’re good without one, it may make sense to avoid bringing it for the move. Do you absolutely need to bring along 14 trash bags filled with clothing? If not, sell some of it to raise extra funds.
  • Try to get a side job- Most young people in a big metropolis like NYC or LA don’t have just one job, especially when they are newly independent and still figuring things out. Sometimes, having that extra income is all you need to make a difference. 
  • Live in the suburbs- Though it often makes sense to live in the city, sometimes, the only way to make things affordable is to find a nice place in the nearby suburbs. 
  • Check out local programs- If you are in a situation where you need to find housing and have lived in the city for the past six months, you might be able to get a home through the Housing Connect—or at least get some kind of help for your budget.

The Final Take

Moving out on your own is intimidating, but it’s absolutely doable. The secret to being able to live comfortably in New York City is knowing what your budget is, sticking to your budget, and working with what you have. 

With a little focus and forethought, it’s possible to move out into your own apartment without too much of a financial burden. It’s all about what you decide to work with, and knowing how to choose the right place for you.