Many young people today are asking the question: Can I afford to move out? The answer to that question is different for everyone.
And there are several factors you should consider in order to find the answer.
In this article, we’ll share key points you need to determine in order to decide if independent living is affordable for you.
How Do I Know If I Can Afford to Move Out?
Studies show that rent amounts increased over 24% in just a one-year time period from 2021 to 2022.
For that reason, using the suggestions below to determine if you can afford to move out is vitally important.
You’ll want to start by following the steps below as you prepare to live on your own.
Determine How Much Your Living Expenses Can Be (30% rule)
Knowing how much your living expenses will be is a great starting point. Financial experts like Dave Ramsey suggest keeping your total living expenses capped at 25 to 30 percent of your take-home pay.
For example, if your take-home income is $4,000 per month, you’ll want to be sure your monthly living expenses are capped at $1,200.
This includes your rent payment and all utilities. If your living expenses are any higher than 40% of your income, you may have trouble paying for other expenses.
Start By Creating a Budget
Creating a budget will help you determine what that 30% number will be, and if you can meet it.
It will also give you an idea of your expenses as a whole, as well as what you can spend on extras such as entertainment, vacations and more.
Sometimes creating a budget is easier when you know what common budget percentages are. Having an idea of common budget percentages will help you flesh out other expenses as well, such as food costs, transportation costs and clothing costs.
As you work to create your budget, consider using one of many popular budgeting apps. Budgeting apps help you keep your budget close by your side.
That way you can always refer to it when considering a possible purchase. And know that there are several types of budgets to choose from.
One of my favorite budget types is the zero-sum budget. In a nutshell, the zero-sum budget consists of assigning every dollar a job.
When you assign every dollar a job before you even get your paycheck, you’re better able to control money waste and ensure your money goes where you want it to go.
Once you’ve determined what your living expenses can be and have created a budget, you can assess exactly what it’s going to cost you to move out.
What Does It Cost to Move Out?
Moving out isn’t as easy as moving your bed from one house to another. There are several expenses you’ll need to consider as you ponder moving out.
Most property managers–whether it’s an individual property owner or a property management firm you’re dealing with–will insist on a rent deposit.
The rent deposit is in place to ensure tenants don’t vacate unexpectedly, leaving rental owners without the rent money due to them.
Rent deposits vary, but they most often consist of one or two months’ rent. So, if your apartment rents for $1,800 per month, you should plan on having between $1,800 and $3,600 available to cover your rent deposit.
You’ll get this money back when you terminate your lease, provided you terminate it as listed in your rental contract.
Most property managers also insist on a damage deposit. Damage deposits exist to help cover repairs of any damage to the rental unit that was incurred during the time of your lease.
Damage deposit amounts vary. However, it’s standard to have to make a damage deposit that is equal to one months’ worth of rent.
So, if your rental unit costs $1,500 per month, plan on having another $1,500 available to put down as a damage deposit.
As with the rental deposit, you’ll get your damage deposit returned to you when you terminate your rental contract, as long as there wasn’t any damage done to the rental unit.
Utility costs for rental units, whether you’re renting a home or an apartment, will vary. This is because all rental properties require tenants to pay for different utilities.
Your rental unit might include heating, electric, water, telephone and trash costs. Or, you may have to pay for them yourselves.
If you do have to pay, find out which utilities are not included in your rent cost. And be sure to ask the property manager what the average cost of those utility costs are.
Better yet, call each specific utility service provider and ask what the average costs for that rental unit are. You will want to figure out ways to save on utility bills like electricity.
Food and Personal Items
You’ll be paying for your own food and personal items when you move out as well. These responsibilities may have been your own when living with your parents, or your parents may have covered them for you.
If you’ve not had to pay for them on your own yet, you’ll want to be sure to include them as you’re creating your budget.
And with food costs rising just like rent costs, you’ll want to be sure to learn how to grocery shop on a budget.
Your transportation costs should also be factored into your budget as you determine whether or not you can afford to move out.
Determine answers to questions such as:
- Will I drive my own vehicle to work from my new place?
- Does it cost money to park at my new rental unit?
- Will I take public transportation and is it available?
- What other transportation modes are available and what do they cost?
Once you determine the answers to these questions you can add transportation costs into your budget.
You’ll need furniture for your new apartment. Is there furniture at your family’s home that you can take with you?
Will you need to buy furniture? There are some places to buy cheap furniture. You may also be able to get free furniture by asking family and friends or checking the free section on Craigslist or sites like it.
If you do end up needing to purchase furniture, be sure to include that as a part of the money you’ll need to prepare for moving out.
Lastly, you’ll want to be sure you have an emergency fund available. Emergency funds are set aside for the purpose of covering emergencies.
They’re meant to be used for specific situations. For instance, they’re used in the event of an unexpected job loss or an unexpected medical situation.
Your emergency fund should be available to pay your rent and other expenses in the case of a loss of income.
Who needs an emergency fund? Hint: Almost everyone. Still worried about whether or not you can afford to move out?
Check out the tips below on how to live for less.
How to Live On Your Own For Less
Luckily, there are many things you can do to live on your own for less. Here are some tips on how to do that.
Look For Roommates
Having roommates is a great way to live on your own for less. Look for roommates that have similar living expectations to yours, and that will also be responsible and pay their expenses.
Plan Your Living Location Strategically
Also, plan your living location strategically. Can you live close to work so that you don’t have high transportation expenses?
Can you live close to public transportation lines? Or, can you work remotely so that you can find a cheaper living space that might not be quite so expensive?
Consider all of these factors as you decide where to live.
Find a Work for Rent Situation
Another option is to find a work for rent situation. Look on Craigslist and talk with family and friends for opportunities where you can live for cheap or free in exchange for work.
Spread the Word that You’re Looking
Also, be sure to spread the word that you’re looking for an affordable living space. You never know how you might be connected to someone who can give you affordable housing.
Consider Alternative Rentals
Lasting, consider alternative rentals. Can you rent the basement of a friend? Live in a camper? Rent a tiny house?
There are alternative rental opportunities that can help you afford to be able to move out. You just need to work to find them.
Can I Really Afford to Live on My Own?
The question at the end of the day is, can you really afford to live on your own? The answer to that question depends on two things.
First, whether or not you’ve created a realistic budget based on your personal circumstances. And secondly, whether or not you can make your income meet that budget.
If you can ensure those two factors are covered, you can indeed afford to live on your own.