How Much You Should Save Before You Move Out
Your guide to saving for your first place.
Even when the creature comforts of your parents’ place are sweet, you may eventually start to wonder "how much does it cost to move out"? It can be fun to fantasize about the places you’d live and the things you’d furnish your pad with––not to mention the Great Gatsby-sized parties you can imagine throwing.
But sooner or later reality hits. It's time to break down the numbers and see what your budget really has room to handle. There’s a lot to consider, so here are 8 topics to ponder before packing your bags:
1. How much do you need to save to move out?
Paying rent for the first time can be a real shock to the system (and bank account). Do you know what you can afford? What price range should you aim for as you start searching?
A popular rule of thumb says your income should be around 3 times your rent.1 So, if you're looking for a place that costs $1,000 per month, you may need to earn at least $3,000 per month. Many apartment complexes and landlords do follow this rule, so it makes sense to focus only on rentals you’re likely to qualify for.
As far as how much you should save before moving out, there are several other expenses to consider:
- Most landlords will charge first and last month’s rent as well as a security deposit.
- Parking may be an additional monthly expense if street parking isn’t an option.
- Utility bills like wifi, water and electricity are also necessities you should probably prepare for (although water is sometimes included in the rent).
Once you add in the cost of transportation, food and your phone plan, monthly totals can add up fast. Instead of getting overwhelmed, why not use the opportunity to create a budget for yourself? Getting your expenses down on paper can be a real eye-opener and help prepare you for all that independent living entails.
2. Does credit really count?
Yes—landlords usually take your credit history seriously. This is so they can gauge what kind of bill paying habits you have.
In fact, it can be difficult to make any big purchases or moves with a poor credit rating. Luckily, checking your credit score can be free and easy.
To avoid snags in getting your first place, you might want to start monitoring this number regularly. You can make sure the information is correct, watch debts go down as you pay things off and even get alerts if there’s suspicious activity. When researching "how much should I save before moving out?" make sure your credit is in good standing.
3. Are you being realistic?
If you won’t be living like an episode of Friends right away, it’s good to make sure your expectations align with your actual budget, job prospects and ability to rebound from unexpected events.
Jena, 23, a recent college grad, ran into job struggles soon after moving out. "Unfortunately, I had to move back with my parents after several months due to the cost and inconsistency of employment," she says.
Aside from the hassle of moving again, having to break a lease may come with some real headaches. The landlord may go easy on you and simply find a replacement. However, you may have to pay the balance on your lease, be subject to legal action or receive a negative mark on your credit report.2
So when thinking about how much you should save before moving out, having a cushion to fall back on is probably a good idea. You could even open a savings account just for that purpose. Call it your "countdown-to-freedom fund" or whatever keeps you motivated–just as long as it helps you stay focused on the prize.
4. How will you fund your furniture?
As the saying goes, one person’s trash is another person’s treasure–especially when the “trash” is in the form of your cousin’s gently used couch or a desk your granddad no longer needs. Hand-me-downs can lower those costs to consider when moving out and help you reach your goals more quickly.
"I posted a message on Facebook when I was getting ready to move out," says Jordan, 21. "Between my family, friends and even friends of friends, I scored nearly an entire apartment full of furniture. I didn’t have to touch my savings, which came in handy when my car battery died a few months later."
5. How's the neighborhood vibe?
Most leases run for a year, so it pays to make sure you’ll be comfortable in your surroundings for at least four seasons.
For instance, you might want to check out transportation options. Is the subway stop a far trek in the snow? Or in 90-degree temps? How about the shopping? Do you have a few grocery stores to choose from or one pricey health food store?
Then there’s the everyday environment. Does a big, green park fit your lifestyle or would you rather have some nightlife nearby? It’s a good idea to think about how you spend a typical week, then see if your new community fits the bill.
6. Can you make it long-term?
Sometimes, the excitement of a new place overshadows the long-term commitment needed to stay afloat. Bridget, 24, knows a bit about this issue. She admits, "I wish I really took into account the utilities I would be paying and started a savings plan sooner, so I wouldn’t have trouble staying on top of my bills."
It can be super stressful living paycheck to paycheck to pay for a place you love but your wallet can barely afford. Calculating how much money to save to move out is a good start, but knowing how much it’ll take to stay there can really help set you up for success.
7. What’s the rush?
As you start looking at places, you’ll get a better idea of what you prefer (a balcony? a first-floor unit? a dog park?) and whether it fits in your price range. This can really shed a light on how much you need to save before moving out. Everyone has an image of their ideal home, but you may have to make some trade-offs or wait until you’ve saved a bit more cash.
Once you narrow down your choices, don’t be afraid to inspect the space and ask lots of questions. It's a good idea to know exactly what you're getting into before locking yourself into a lease. Shane, 23, has had ongoing issues with heating in his apartment. "I wish I would've taken a more careful look at the place I moved into before signing the lease," he says.
8. Are you open to a roomie?
Finding someone to split housing costs with can be a great way of getting out on your own. Lightening the financial burden of rent and utilities may give you a bit more leeway to spend, save and cover emergencies.
A roommate can even make it possible to live in a neighborhood or building you really dig–without going broke. In Philadelphia, having a roommate could save you 36.5% on rent. In New York, 40%.3 Just make sure you find someone you can really trust.
Moving out is a dream that most young adults have, but like all big dreams it takes real preparation. Some careful planning, and a comfy financial cushion, can make all the difference when you’re ready to leave the nest. And creating a space all your own can be a pretty sweet experience.
This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
Collatz A. Rent-to-Income Ratio (August 2, 2018) Retrieved from: https://www.mysmartmove.com/SmartMove/blog/rent-to-income-ratio.page
How to break a lease on your apartment (n.d.) Retrieved from: https://www.rent.com/blog/how-to-break-a-lease/
Trulia. (February 20, 2017) Retrieved from: https://public.tableau.com/profile/marku8762#!/vizhome/2bedroom_savings/Dashboard1