minimum savings

Moving into a new apartment is exciting but also expensive. There are a lot of costs and fees associated with renting an apartment. Some, like monthly rent and the security deposit, are immediately obvious and expected. But, you’ll also encounter unexpected costs or hidden fees during this process, like move-in costs or needing new furniture.

All the costs involved can stack up quickly, ballooning well past just the cost of the rent. So, how much do you actually need to save toward renting an apartment before moving in? You want to save enough money to cover all costs involved in renting an apartment, as well as standard, day-to-day living expenses. Here are all the costs you need to budget and save for before renting an apartment and how much you should save.

Why do you need to save money before renting an apartment?

Rent money is just the tip of the iceberg regarding apartment costs. Here’s a list of all the upfront costs and expenses your apartment savings fund should include and cover:

First month’s rent and last month’s rent

When moving in, you’ll have to pay the first month’s rent. Many landlords or property managers may also require that you pay rent for the last month, as well, prior to moving in.

Security deposit

To rent an apartment, you’ll also need to put down a security deposit. Security deposits are usually the same amount as one month’s rent, but sometimes they’re less if you have good credit or a co-signer.

Many landlords also require a security deposit if you’re moving in with a pet, better known as a pet deposit.

Application fees

Most landlords charge an application fee for them to consider your rental application. These application fees are usually between $25 and $50 but can get as high as $100. You may also have to pay for a background check screening, which is generally in a similar price range.

Since you’ll likely submit several applications, you should set aside $100-$200 to cover these fees. While generally non-refundable, if they accept your application, sometimes, the application fee gets put toward your security deposit.

Utilities

While not necessary, it’s a good idea to also save for your first month’s worth of utilities. You’ll spend a lot of money all at once during the rental process, so you may as well plan ahead and budget for utilities.

The cost of utility bills like electricity, internet and water varies depending on factors like usage and time of year. But, you can make a rough estimate based on average utility costs.

The average monthly cost of electricity is $115, while the average water bill is $70. Internet usually costs $60 and trash and recycling is $15. Taken all together, that’s $260. So, you should save between $250-$300 for the first month of utilities.

Many apartment complexes include some or all utilities in the rental rates. But, it depends on the apartment complex. In some cases, you’ll need to pay monthly bills directly to the utility companies.

Appliances, furniture and apartment furnishings

If this is your first apartment or you’ve gotten rid of a lot of stuff before moving, you may need to budget for new furniture, décor and other necessities.

Many apartments come with appliances included, but not always. If you choose an apartment with a washer and dryer hook-up but no machine, you may need to set aside money for a washing machine.

How much you should save for these expenses depends on personal needs and preferences. You may only need several hundred dollars if you already have most of the things you need. But if you have a big list of things you buy, it could go up into the thousands.

Insurance and additional fees

Along with application fees, some apartment complexes will also charge apartment fees for things like move-in cleaning or parking fees. You’ll likely also have to get renter’s insurance.

Moving costs

Moving expenses and moving costs are especially important expenses to consider, as they range anywhere from $1,400 to $5,700. Even if you don’t opt for a professional moving company, you’ll still need to pay for a moving truck and moving supplies.

Miscellaneous costs

Now that you have the essentials down, it’s time to account for the assorted miscellaneous costs that pop up during the apartment rental process.

There are tons of little expenses and costs that go into getting an apartment. Moving into your first apartment or even just a new apartment, you’ll have to buy basic items like cleaning supplies and food. If you want cable or to use a specific internet provider, you may have to pay an installation fee.

Overall, there are a million tiny things that you’ll need around your apartment, as well, like a shower curtain or a doormat.

With so many other things to pay for, you also can’t forget regular monthly expenses like car payments as well.

How much do you need to save for your first apartment?

Now, the big question: How much money do I actually need to set aside for an apartment?

Based on the above categories, you should save an amount equal to at least 3-4 months’ rent. That will cover paying rent for the first month, security deposits and last month’s rent. But, how much should that be? The amount of money you should save toward your apartment depends on apartment prices, which, of course, are variable and subjective.

As an example, the national average rent for a one-bedroom apartment is $1,701. That comes out to $5,103 for three months’ rent. You’ll need $6,144 to cover the average rent for a two-bedroom apartment of $2,048.

Remember, that’s just for monthly rent and deposits. You’ll need to set aside even more money for all other living expenses like utilities. Going back to the one-bedroom apartment example, add $260 to that $5,103. Tack on $100 for apartment and application fees and $168 for renter’s insurance. Let’s roughly say $500 for assorted costs like stocking the fridge and buying some new furniture. That comes out to a minimum savings of $6,131.

You should also save more money than you think you’ll need in case of emergencies or unexpected expenses.

How long does it take to save up money for an apartment?

How long it takes you to save up money for your apartment depends on your monthly income and pre-existing expenses.

If you’re a high earner in good financial standing with a high gross income, it may only take a few months to save enough. Even if you don’t make a ton of money, there are ways you can reach your savings goal faster.

How to start saving money for an apartment

Needing to save thousands of dollars for an apartment can seem like a daunting task, especially for young adults who don’t make a ton of money. But, these tips will help you save money toward getting that apartment.

Know what you can afford to pay in rent

Most importantly, don’t bite off more than you can chew when it comes to renting. You need to know how much rent you can afford to pay each month while having money left over for other essentials like food and utilities.

First, check your pay stubs to figure out how much you make each month. You should also know what other expenses you make on a monthly basis. Once you know what you earn, you can calculate your rent.

A good rule of thumb is to only spend 30 percent of your income on rent. Many landlords also require a rent-to-income ratio of one to three. In other words, you need to earn three times more than your rent.

For instance, if you’re paying $1,701 for a one-bedroom apartment, you need to bring in at least $5,670 monthly.

Set up a savings plan

To start reaching your savings goal, get organized. Based on your income and expenses, set up a savings plan that allows you to set aside a certain amount per month. The more you’re able to save each month, the faster you’ll reach your goal.

You can even check with a financial advisor to help you set up a plan and save.

Set up a separate bank account

Open a savings account specifically dedicated to your apartment fund. That way, you won’t spend it and it’s removed from your regular savings and spending.

Cut back on expenses

You can boost your savings and reach your goal faster by cutting back on non-essential expenses like streaming services or magazine subscriptions. If you’re paying for a subscription that you don’t use or need, that’s just wasting money that could go toward your apartment fund.

It’s hard to cut back on fun activities or services, but it’s just temporary. Once you’re settling into your new apartment, you can renew any expenses you took a break from during your savings period.

Shop smart

Along with cutting back on unnecessary spending, you can stretch your budget even more by becoming a thrifty, bargain-seeking shopper. The less you’re spending on things like food, the more you can put into your savings.

At grocery stores, buy generic brands to take advantage of lower prices. You can also buy things in bulk, like toilet paper, to save more. Using coupons or shopping sales are other handy ways to spend less and save more.

For bigger items like furniture, go to thrift stores or garage sales. This option may not work for everyone. Buying second-hand items sometimes means they’re not in the best shape, or it may take a while to find the exact item you’re looking for. But, with patience and persistence, you’ll find good, high-quality items at greatly reduced prices.

In this expensive rental market, you’ll have to save thousands of dollars for an apartment

With high rents and rising prices, it’s getting more and more expensive to rent an apartment. You’ll need to set aside and save thousands of dollars for even a one-bedroom apartment. But, the amount of savings you’ll need does depend on the cost of rent, so you can find more affordable apartments that require lower levels of savings.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.

Source: rent.com