Think you're ready to move out and live independently? Before you rush out to get your own place, develop a budget to make sure you don't start out in life with a mountain of credit card debt. Living on your own for the first time can be exciting, but it requires planning and diligence.
Here are 9 things to consider when deciding whether the time is right for you to move out on your own.
Failing to set and follow a budget is one of the biggest mistakes you can make when you live on your own for the first time. One rule of thumb is to follow the 50/30/20 rule—plan to spend 50% of your income on fixed expenses such as housing, utilities, transportation and insurance, and 30% on variable expenses such as groceries, entertainment, and miscellaneous. This will leave 20% for savings and emergencies. Setting and following a solid budget will help ensure that your first years on your own get you started on solid footing.
Did You Know? One of the biggest mistakes people make when moving out on their own is not having an emergency fund. Set aside some money to handle unexpected expenses so that you don't have to rely on credit card debt to see you through.
Housing will likely be your biggest expense. When you move into an apartment or a house, be sure to account for the extra expenses that go with the monthly rent. These include application fees, security deposits, first and last month's rent (if required), and other expenses such as parking or pet fees. If the place you want to rent is unfurnished, you'll need to get furniture and other necessities such as bed linens, towels, cookware, and other kitchen items.
Did You Know? Be sure to take photos to document the condition of the apartment or rental unit before moving in. If there are pre-existing stains in the carpet, cracked windows, dents in the walls or other issues, make sure to bring it to the attention of your leasing agent or landlord, so that you aren't held responsible for the damage when you move out.
While utilities could be included in your rent, many times they are not. Be sure to ask about the cost of water, gas, electricity, and garbage; the landlord or rental agency should be able to give you a good idea of how much these will be each month. Don't forget to include the cost of your cable or internet service, as well as money needed to purchase your router and modem, if needed.
4. Groceries and household
Set aside money to stock up on staples such as condiments, spices and other items for your pantry, then count on weekly grocery bills that range from $50 to $100 per person. You'll also need to budget for everyday household items like cleaning supplies, light bulbs, toilet paper, and personal items such as soap and shampoo.
If you have your own car, count the cost of vehicle registration and licensing fees, as well as maintenance such as oil changes and tire rotations into your budget. Be sure to also set aside money to cover larger expenses such as new brakes or tires or major repairs. If you use ride-sharing services to get around town, set a budget for this as well.
People rarely realize the importance of insurance until it is needed. You'll need renters insurance to protect yourself from loss due to fire, flood or burglary. Car insurance is required in most states, and now may be a good time to review your insurance needs with a broker who can help you find the right insurance at the best price.
Much of the fun of living on your own includes getting to go out when you like. But expenses for things like dining out, movies, and vacation travel can add up quickly, as can monthly subscriptions for online streaming services. Be realistic when deciding how much you'll spend for entertainment.
Your decision to move out may mean that the cost of your cell phone is no longer included in your family’s plan. Also consider the costs of clothing and dry cleaning, gym memberships, pet food and vet bills, and other expenses.
While savings appears last on this list, it should be a top priority. If your job includes participation in a 401(k) or other savings program, budget enough money to take full advantage of any matching funds from your employer.