Moving out of your parents’ house and into a place of your own is a huge milestone. Whether you’re looking forward to flying solo or you plan to share a space with roommates, it’s a significant step toward independence.
While this transition is exciting and empowering, it can also be more expensive than you may anticipate. Living independently stretches your dollars far beyond the price tag of monthly rent. There are many costs to consider, including utilities, food, and insurance, to name just a few.
If you’re currently living at home, now is the perfect time to begin planning. In this article, we’ll highlight many expenses young adults tend to overlook and provide tips to ensure your budget is realistic and tested.
Save, Save & Save Some More!
If you can live at home for a bit while your parents cover most of the bills, you’re in luck. This is your chance to save any money you can before setting out on your own. Never take this phase of your life for granted. Your parents are essentially providing you with a golden opportunity to bank as much money as possible.
Use this time to start tracking all your monthly income. Then, begin estimating future monthly expenses so that you can create the framework of a working budget. If you’re unsure of the costs that lie down the road, we’re here to highlight common expenses.
Essential Expenses
Start with the basics. Begin making a list of all the monthly expenses you know you’ll encounter. While some might seem obvious, even the most common charges can catch you off guard if you aren’t prepared.
Begin building your move-out budget by starting with these staples:
-
Rent:
Likely to be your largest monthly expense, rent can quickly eat up a significant portion of your budget. Be realistic about what you can afford. A common rule of thumb is to spend no more than 30% of your income on rent. That might be a tight squeeze, especially if you are living alone and without roommates to share in the cost. If so, find ways to trim your budget in other areas to free up extra funds for housing.
-
Utilities:
Budget for electricity, natural gas, water, trash, internet, and cell phone service. Some apartments include certain utilities with your monthly rent, such as trash or water. Be sure to factor these savings in when comparing different living spaces.
-
Groceries:
Many young adults are surprised by how much they spend on food monthly. Ask your parents how much they spend toward groceries each month. Then, determine which portion of that amount you should budget for yourself. Include dining out costs along with miscellaneous items, such as toiletries and cleaning supplies.
-
Car-Related Costs:
Ensure you earmark funds for gas, car insurance, loan payments, and as-needed maintenance. If you live in an area where you can rely more on public transportation, include those costs here as well.
-
Health Insurance:
If you’re no longer covered under your parents’ health plan, you’ll need to purchase your own coverage or obtain it through your employer.
-
Student Loan Payments:
If you have student loans, make sure you set aside money to cover the monthly payments. Consider setting up automatic payments to ensure you never miss a due date. Now that you’re living on your own, your credit score will play a significant role in obtaining loans and leasing apartments in the future.
-
Other Debt Payments:
Any outstanding credit card balances, loans, or Buy Now, Pay Later plans also need to be factored into your monthly budget.
-
Subscriptions & Monthly Services:
Don’t forget about your streaming services, monthly deliveries, and any other subscriptions you might be enrolled in. Many of these costs may be nominal, but small expenses can add up quickly.
-
Savings & Emergency Fund:
The best way to guarantee you’re putting aside money monthly is to treat your savings like any other bill. The only difference is that you’re paying this money to yourself (well, to your savings account).
Unplanned expenses will pop up when you least expect them. Being financially prepared is the real test of adulthood. Start small and put money aside monthly. Aim to save at least three months of living expenses in your emergency fund. That might seem like a lot, but if you suddenly lose your job, you’ll have money to cover your essential expenses without having to rely on costly payday loans or high-interest credit cards.
Test It: Give Your Budget a Go!
Once you set up your monthly budget, test it. Before you move out of your parents’ house, see if you can make the budget work. Instead of paying actual bills, transfer money from your Checking Account into your Savings for those specific amounts.
The hardest part of testing your budget is managing unplanned expenses. For example, your friends stop by and want to go out to the movies, attend a concert, grab dinner, or go clothes shopping. Understanding how these events directly impact your budget is crucial.
If you can’t make your budget work, go back and rework sections. Determine what areas are holding you back and find ways to trim costs. Testing your budget before you move out ensures it’s realistic and you won’t be caught off guard when you’re living on your own.
Commonly Overlooked Expenses
When moving out on your own, the most overlooked costs are those specifically associated with moving. They can hit your wallet hard if you aren’t prepared.
Ensure you put aside as much as possible while living at home to cover these upfront costs:
-
Leasing Fees:
Most apartments require application fees, security deposits (often the first and last month’s rent), move-in fees, pet deposits, and renter’s insurance – if required by your landlord.
-
Utility Deposits:
Most utility companies require upfront deposits before they turn on service at your new place.
-
Moving Expenses:
Depending on where you’re moving, you might need to rent a truck or hire professional movers. You’ll also need boxes and packing supplies. If you’re leaning on friends and family to help you move, be sure to factor in drinks and pizza costs.
-
Furnishings:
You may have some furnishings already, like a bed or couch. But you’ll need everything from dishes and cooking utensils to drapes and décor. Luckily, you don’t have to rush to furnish your new place right away. Focus on the necessities and spread decorating over the next few months.
-
Stocking the Pantry & Fridge:
Essentials such as condiments, spices, paper towels, and dishwasher soap all add up quickly. If you’re still living at home, focus on buying non-perishable essentials in the months prior to moving out to limit the impact on your budget.
-
Lawn & Pest Services:
Most apartments include lawn care and pest prevention in the monthly rent. However, if you’re renting a house, plan on either handling these tasks yourself or budget to hire professionals.
We’re Here to Help!
Moving into your own place is exciting and a significant milestone. Before you make the move, find ways to keep setting aside money, create and test your budget, and begin buying essentials. If you don’t already have an account at the credit union, now is the perfect time to join!
With 24/7 access to digital banking tools and convenient checking and savings accounts, you can manage your money, pay bills, and transfer funds in just a few taps. If you want to learn more or open an account, we’re ready to help. Please stop by the Credit Union or call 410-687-5240 to speak with a team member today.