If you are moving out of your home for the first time, you’ll be wondering how to budget for your move.
Here are some tips to help you get started.
Consider paying rent and Renter’s insurance. Also, be sure to purchase affordable furniture.
In addition to considering thrift stores for your furniture, If you don’t mind buying second hand and going for hand me downs than those are greats ways to own the wallet and keep costs minimal.
The last thing you want when you are starting a new leaf in your life is more debt.
A bank account is a great place to start for keeping tabs on your expenditures. Keeping track of all your expenses will help you avoid making impulse purchases.
Contents
Rent
Your biggest expense when moving out is rent. You may want to consider living with a roommate in order to cut the rent bill.
However, beware of bad housemates! MIT’s living wage calculator can give you a rough estimate of how much rent is in your city.
For example, a single person in Birmingham will pay $665 per month, while a single person in New York City will pay $1,352 per month.
Rent is also likely to require a deposit ranging from a month’s rent to a full month’s rent.
In addition to your rent, you need to plan for other expenses that you may incur during your stay.
Your utility bills should be included in your budget.
This will prevent you from running out of money midway through your lease. It’s also a good idea to budget for furniture, if you don’t have any yet.
If you’ve never owned furniture before, you might as well start with a bed – it won’t cost much to add some new furniture and accessories later.
In addition to your rent, you should also keep track of your credit report.
Keep a close eye on your report to make sure it’s accurate and that your debts have been paid.
Be sure to look for any suspicious activity that may have occurred. This way, you can avoid renting beyond your means and causing further trouble down the road.
Just remember that a mortgage and lease are not forever and you can move on if you need to.
Renter’s Insurance
One way to cut the cost of renter’s insurance is to raise your deductible.
A higher deductible will reduce the amount of coverage you need to buy, but if something catastrophic happens you will likely be left paying more than necessary.
To find out how much your deductible will cost you, ask an insurance representative for a quote.
You can also adjust the deductible to fit your budget. Generally, you should keep the deductible between $500 and $2,000, depending on the policy.
A good renters insurance policy will also cover the costs of staying at a hotel while repairs are done.
It will also cover the cost of meals out at a restaurant or hotel during the time you are out of your home.
You can even use it to pay for parking or commute if you have kids.
In addition to replacing your stuff, you may want to consider the coverage limit, as this can vary from policy to policy.
Another factor that you should consider is how much you’re willing to pay for renter’s insurance.
Some insurance policies include additional living expenses coverage and loss of use benefit.
The latter is particularly beneficial if you are planning to move out soon.
A renter’s insurance policy can make it possible to stay within a budget for a year without worrying about the cost of replacing your belongings.
Once you’ve sorted out the deductible, you’re ready to shop around for a new policy.
Furniture
Unless you’re planning on reselling your old furniture, it’s essential to think about how much you’re willing to spend on moving furniture.
The average person spends more than $8,000 furnishing their new place.
Some homeowners plan on budgeting 10% to 50% of the cost of their new home to furnish it.
For example, if you purchased a $250,000 home, you’d set aside $25,000 to $125,000 for furniture.
Although it may seem difficult to estimate how much you can afford to spend on new furniture, you can start small by looking for used furniture at thrift stores or Craigslist.
Thrift stores are also a great way to buy big items at a lower price.
Remember that some thrift stores only have limited stock, so you may have to buy the item immediately to avoid running out of space.
However, you can still find some great bargains at these places!
Before you start shopping for new furniture, it’s important to assess your budget and decide what items you absolutely must have.
The biggest furniture items – like couches – are likely to cost a lot more than smaller items.
Make sure you’re comfortable with the amount of money you’re willing to spend every month to buy your dream furniture.
Once you’ve determined how much you’re willing to spend, you’ll be able to prioritize your needs and save for the items that matter most.
Appliances
While buying new furniture is a must, you can also delay buying appliances.
While it may be great to avoid eating on the floor for the first few days, it will cost you more money to get a new kitchen later.
The Pro Tip for saving up for these purchases is that, First, you must decide what appliances you absolutely need.
Then, determine how much you can spend on each item.
Then, you can add more later.
Utilities
Depending on the size of your house and where you live, the cost of utilities can vary dramatically. You should call utility companies and find out the estimated monthly cost of water, gas, electricity, and sewage.
According to the U.S. Energy Information Administration, the median monthly cost of electricity, gas, and water was about $70.
However, there are some exceptions to this rule. Be sure to plan ahead and budget for these expenses.
It is also important to include these expenses when you budget for utilities. These include your electric bill, water for hot showers, air conditioning, and heating in the summer.
You may need to set up autopayments or pay more upfront to save money.
If you can’t afford the monthly bill, budget for air conditioning as well.
If you are moving to a new city, research average utility costs in the area so you can make an informed budget.
The local municipality oversees water and sewage. It includes the water used in the bathroom, as well as sewage system.
If you live in a rental, you may need to pay for these costs separately. However, most landlords build the cost of water and sewage into the rent payment.
If you are renting a home, you should consider this cost. You will save money by switching to an energy-efficient furnace and water heater.
Building An Emergency Fund
You can make your emergency fund grow by opening a high-yield savings account, which has a similar rate of interest to a regular savings account, and transferring a portion of your income into it.
It is important to start small, but you should aim for at least $250. This amount can be boosted each month with a windfall, such as a pay check, so that you can withdraw the money without incurring penalties.
You must also start to reduce your expenditures.
Cutting back on your spending will save you a great deal in the future, and you’ll thank yourself for taking the first steps to start saving.
Cancel the subscriptions to magazines, movies, and music that you don’t use frequently.
You may also consider buying physical versions of your favorite games. This way, you can swap them out when you’re bored of one.
You can also set a goal to save money for six months. This goal is important, because you can easily get discouraged if you don’t reach your goal quickly.
Try setting a specific amount of money every week or month to save. This will help you determine how much you can cut from your daily spending.
It’s best to begin with a small emergency fund and gradually increase it over time.
Moreover, it’s better to be prepared than to be broke due to an unanticipated emergency.
Save Money Before Moving Out
Having an emergency fund is vital to saving money before moving out.
These funds should be at least three to six months’ worth of expenses. This money can be used for unexpected bills or car repairs.
If you can, keep some money in your emergency fund to pay for the unexpected.
As a rule, you should set aside a certain percentage of your monthly income for emergencies.
For example, if you are going to leave your apartment after three months, it is best to have at least $8,000 on hand.
Open A Bank Account
It is also helpful to open a bank account. This will allow you to be more responsible with your money. This is especially important for young adults, as carrying cash around can get costly fast.
You may also want to consider adding roommates to share the burden of moving costs.
Creating a spreadsheet of your current expenses can help you identify where you’re spending your money.
Once you’ve figured out what you’re spending, you can start saving for the bigger expenses.
Other items you’ll need to budget for include: a bed, nightstand, lamps, rugs, curtains, tables, chairs, and more will add up fast.
You should save money for these items by shopping around and looking for good deals. Discount stores and yard sales can provide you with great pieces of furniture.
You should also factor in the costs of lost pay while you’re moving if at all this will apply in your situation. If you’re not able to afford all of these expenses, you should start saving money before moving out.
Final Thoughts
There you have it, a general overview of expenses to consider when moving out for the first time.
I trust the article has been informative. Wishing you all the best. -:)