Are you thinking about renting an apartment?
You’ll need to have cash on hand for the up-front expenses plus enough to sustain yourself on-going.
Let’s take an example of a 2-bedroom apartment at $1,500/month. One could reasonably expect to outlay around $8,000 to $11,000 up front for the security deposit, 1st month’s rent, moving expenses, and furnishing expenses. That means you’ll need to have this cash liquid on hand plus be able to pay for all your other living expenses.
Everyone’s situation is different. This is just an approximation. Let’s dive into this a little deeper so you can figure out roughly how much money you will need to have saved up.
What is the monthly rent?
You need to know what the cost of your monthly rent will be and make sure your income is well over it so you have some leftover savings for other expenses like food, entertainment, groceries, and utilities. A good rule of thumb is that your gross income should be at least 3 times your rent.
Do you have enough for upfront fees?
Typically, before move in, you will need to pay the first month’s rent, security deposit, renter’s insurance, and any application / admin fees up front. For example, if your rent is $1,500/month, you likely need to pay $1,500 for 1st month’s rent, $1,500 for a security deposit, and perhaps a $250 admin fee. Renter’s insurance could be $300 for the year. That’s $3,550 or more in cash up front. Also don’t forget that you may need to pay extra for parking so include that in your estimate as well. You might also be required to pay last month’s rent on top of all this.
Do you have enough for furniture and décor cost?
You’ll need furniture like a bed, table, couch, lamps, TV, dressers. Of course, the cost of furnishing an apartment can vary widely based on where you purchase your furnishings, the brand, the material and whether or not it’s custom or stock. Furnishing a one-bedroom with stock furniture from a Wayfair or similar vendor can cost from $3,000 to $4,000+. For a two bedroom, it can cost $4,500 to $6,000+. You’ll need this cash on hand.
Do you have enough for moving expenses?
Moving your items costs money. If you plan to move on your own locally, budget at least $200 to $500 for the rental truck plus moving supplies. If you plan to hire a professional mover, this could be $1,000 to $1,700+. Get some quotes from reputable movers. Get insurance for the move.
How much will utilities/other recurring fees?
Utilities include electricity, water, gas, trash, telephone, and the Internet. You might also have parking fees, amenity fees, and pet fees that you owe monthly. Find out from the landlord which fees are included and which you will be responsible for. No matter what, you will almost certainly have to pay for internet/cable and telephone costs on your own. Be sure you can easily pay at least the first few months of these fees. This will be in the several hundred dollars a month range.
How much will you spend on food and groceries?
If you’re not careful, your monthly grocery bills can add up, which is why it is always good to budget and meal plan ahead of time. Similarly, eating out regularly can put a dent in your wallet so consider how much you have left after rent, utilities and groceries before making that trip down to the local pub or café.
It is important to be cautious and prudent with your savings so that your expenses don’t end up being more than your earnings. You also likely have other expenses such as debt payments, car payments, school, and more. Be sure you have enough money for these plus any savings goals. Err on the side of caution. Seek professional financial advice if needed.
*This article is merely meant to provide general guidance for those seeking to understand the costs associated with renting their first apartment. It is NOT in any way meant to be financial advice or a substitute for any professional financial advice. All readers are strongly encouraged to seek professional advice.