They say that money is not everything and oftentimes you get to see how right they are (whoever those people might be!). But when the right time has come for you to move out of your parents’ house or when you’re finally ready to move out of that awful rented place, then you might get the peculiar feeling that those wise guys could be dead wrong.
You’ll probably find it impossible not to be thinking about the exciting new life that awaits you in your new apartment or house, including the spectacular ways you’ll decorate and arrange your new place and the long awaited privacy and independence that will come as a bonus. And such thoughts can be so genuinely exhilarating that you may easily get carried away.
What you should be really thinking about is how much money to save before moving out, and whether you can actually afford to have and maintain a place on your own.
What’s a good amount of money to save before moving out?
Moving to a new home of your own is a very big step that also comes hand in hand with serious financial responsibilities. And before you even start the moving preparation, it’s critical that you figure out if you can afford to make that relocation step yet. Why? Experts agree that moving into an apartment for which you are not financially ready can lead to disastrous results – more often it’s the never-ending stress that will take its toll on your mind and body.
To have a steady income is by far the best way to save money to move out and tackle the approaching financial burden but you still must calculate the maximum amount of money you can pay for rent or mortgage. In practice, there are two ways of doing just that:
- Divide your monthly income by three, or
- Divide your gross annual income by forty.
Again, the amount of money you get by the above-mentioned simple mathematical operation should be the maximum sum you should pay in monthly rent or mortgage even if the temptation to go a bit higher can be strong. One of the most common mistakes that renters make is to rent beyond their means while thinking that they can always work harder later to compensate for the difference.
The truth is that if you do the sensible thing and don’t get too greedy, then you can always upsize your home later on when you gain the required financial stability.
SEE ALSO: How to save money for moving out? /10 amazing cost-saving tips!/
How much money should I save before moving out?
Let’s have a look at some more concrete example costs that will help you get a better idea of how much money to save before moving out of state:
- Rent + security deposit. Now that you know the approximate maximum monthly rent from the previous paragraph, you’ll need to add the security deposit which often equals one month’s rent. Of course, you are entitled to receive that security deposit back one day when you decide to or have to move out of the place, but until then that sum will be simply unavailable. Furthermore, don’t forget to include the customary charge for a background and credit check which should cost you somewhere between $40 and $100. So, how much money to save when moving? For starters, make sure you have 2x the first month’s rent + $100.
- Moving costs. Your moving costs can vary greatly depending on a number of influential factors: type of move (self-moving costs, professional movers costs), move distance (local, cross country, coast to coast), move size (1-bedroom or 3-bedroom home?), additional services needed (packing, unpacking, furniture disassembly, etc.), hidden moving costs, and last but not least – the selected moving company (yes, some movers are just more expensive than others). According to reliable statistical data from the American Moving and Storage Association (AMSA), the average cost of a cross country move is roughly $4,300 for a distance of around 1200 miles, while the average price for a local move is roughly $2,300 for hiring 4 movers and a truck. The stated average moving costs have been calculated for a home size with an average weight 7,400 pounds. Want to know exactly how much your move will cost you, including packing? Use our moving cost estimator to get initial contact with top-rated movers and have your future costs calculated.
- Utilities. No matter how thrifty you are, paying for utilities is a substantial expense you simply can’t ignore. Roughly speaking, you should expect to pay around $200 per month for using the major utilities (electricity, water, gas, Internet access, etc.). Also, you are strongly advised to purchase renter’s insurance against fire, flood or break-in – it’s roughly $200 a year.
- Furniture. If you own enough furniture and you’ve decided to pay the price for its relocation, then you got yourself covered in that department. However, if you don’t own enough furniture pieces and your new place comes unfurnished, then you should definitely add the price of new or second-hand furniture pieces to your preliminary calculations. Paying more to furnish your new apartment or house won’t guarantee a better result, therefore spend as much money as you can afford. Rule #1 is to not sprint towards the furniture store as soon as your move is over. Be patient and give yourself enough time to find really good deals that will be worth it. Consider the expense for furniture as a recurring expense for months to come rather than a single big sum in the very beginning. Thus said, if you’re careful with your money, you can manage to furnish your new home for under $500.
- Transportation costs. The transportation costs you will incur on a monthly basis are not to be underestimated as they can be rather high depending on the city itself, your precise location within the city and your preferred means of transportation when you commute to work. Using more affordable public transportation, riding your bicycle to work or carpooling are good ways to lower your monthly costs for transportation but you should still expect to part with a few hundred dollars for having the privilege to stay mobile.
- Contingency fund. How much money to save to move out? Clearly, it’s an impossible problem that even the best mathematician in the world won’t be able to solve for you. The golden rule here is to always be prepared for unpleasant surprises – after all, moving house is far from being a fairy tale. Set a contingency fund and put away as much money as possible for highly unpredictable move related situations and even more unpredictable post-move scenarios. Having a bit of extra savings for rainy days will give you the peace of mind you need to survive a residential move.
BONUS READ: How to save money after moving out?
READ ALSO: How to find the right home for me when moving to a new city?