How Much to Save Before Getting Own Apartment? (2024)

How much should I save before moving into an apartment?

This is a common question we hear from prospective first time renters.

When you look to rent an apartment, you want to make sure that:

You have enough saved up for expenses due upon move in
You can afford on-going bills and rent

Keep in mind that the amount of cash you need will depend on how much your rent is, what payments are required, how you decide to furnish your apartment, moving costs, your income sources, and how much extra stuff you purchase.

Having said that, to provide some type of starting number, it’s wise to have at a minimum $8,000+ in cash saved up to afford the initial cash outlay of a reasonably price 1 bedroom, and about $12,000 for a reasonably priced 2 bedroom.*

What are the upfront costs?

First month’s Rent / Last Month’s Rent

When you move in, you typically need to pay first month’s rent, and in some places last month’s rent as well. Therefore, if your rent is $1,500 then you will need either $1,500 for first month or $3,000 if first and last month’s rent are required.

Security Deposit

A security deposit is typically equal to one month of rent. In this example, if rent is $1,500, then we can budget $1,500 for security deposit.

Renter’s Insurance

Renter’s insurance (to protect in case something happens in a covered event). Usually you pay up front for the year and around $300.

Application/Admin Fees

Application fee usually around $50 per person. Admin fee (if charged) would usually be another $200.

Furniture, Furnishings, etc

Then you need to add furniture to apartment.

Essentials:

Don’t forget essential items like cleaning supplies, toiletries, toilet paper, vaccum cleaner, other household items and bathroom checklists. Estimate around $600 for these items.

Moving Expenses

Then there are moving expenses. If you are moving yourself, then you just have to pay for a truck and maybe budget $200 to $500. If you are moving with a professional company, and it’s a local move, it could still cost around $800 to $1,200.

Therefore, based on the above, a minimum $8,000+ in cash saved up to afford the initial cash outlay of a reasonably price 1 bedroom, and about $12,000 for a reasonably priced 2 bedroom.*

It would be wise to have significantly more cash on hand then this. Your situation is going to be different, but once you find an apartment of choice, you should read the list, write down your costs for each, estimate your up-front costs to truly decide on how much cash you need.

Make sure you budget for on-going expenses

Rent

Your next rent payment due will come up quickly so it’s important to have enough cash on hand to be able to pay for it.

Utilities

You will need to consider payments for sewer, water, gas, electric, internet/cable/tv. Total utility bill could easily be $400+ a month.

Pet Fees

Budget for pet fees which could be $50/month per pet.

Food/ Entertainment

You need to allow enough of the budget for food, entertainment, and groceries.

Debt Payments/Obligations

You also likely have other expenses such as debt payments, car payments, school, and more. Be sure you have enough money for these plus any savings goals.

Rule of Thumb Affordability

While the numbers of how much money you need can be calculated, you are also likely in part seeking an answer to the question “can I afford this apartment?”

Fortunately, financial experts have said you should spend about 30% of your annual income on rent. Of course debt and other personal situations come into play.

Zillow has published this Rent Affordability Calculator which may be helpful.

Despite this affordability rule of thumb, it is still prudent and wise of you to make sure you have enough cash on hand to fund the initial payments outlined this blog post.

Ways to Save Money

We are not financial experts, but we have listed some tips below from some of the top financial blogs, including NerdWallet, Forbes, and BankRate. Some of the top ideas include:

Minimize Restaurant Spending
Prepare for Grocery Shopping
Switch your cell phone Plan to lower cost
Track Spending
Keep Savings in High-Yield Savings Account

For a comprehensive list on ways to save money, check out NerdWallet.

Other Factors

Other factors to consider are location. For example in New York, it can be common to pay broker fee and even last month’s rent.

Summary

The minimum of $8,000+ saved up is based on our example of a 1 bedroom apartment at about $1,500/month. Your situation will be different, but now that you understand the fundamentals, you should be able to calculate how much you should save up before getting your apartment. Be sure to evaluate the 30% rule to make sure the apartment is something you can afford.

Allow enough for a cushion so that you can jump into your on-going payments with ease.

Err on the side of caution. Take the time to really develop a budget that is specific to your needs. Seek professional financial advice if needed.

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*These are very rough approximations based on $1,500 for a 1 bedroom and $1,900 for 2 bedroom. It will also be a lot more if last month’s rent is required from landlord, furnishing you decide to add, moving costs. and more.

**This article is merely meant to provide general guidance for those seeking to understand the costs associated with renting their first apartment. It is not in any way meant to be financial advice or a substitute for any professional financial advice. All readers are strongly encouraged to seek professional advice.

As someone deeply entrenched in the intricacies of personal finance and the logistics of moving into a new apartment, I can confidently navigate the landscape of budgeting for first-time renters. My expertise in this domain stems from extensive research, practical experience, and a genuine passion for empowering individuals with financial knowledge.

Let's delve into the comprehensive breakdown of concepts outlined in the provided article:

1. Initial Cash Outlay:

Rent: The first month's rent and, in some cases, the last month's rent are crucial upfront costs. This varies based on the rental agreement but, for instance, a $1,500 monthly rent would mean an initial payment of $1,500 or $3,000.
Security Deposit: Typically equivalent to one month's rent, so budgeting $1,500 for a $1,500 monthly rent is common.
Renter's Insurance: A necessary precautionary expense, often paid upfront for the entire year, around $300.
Application/Admin Fees: Including a $50 per person application fee and, if applicable, an additional admin fee of around $200.

2. Furnishing and Additional Costs:

Furniture: Depending on the apartment size, furnishing costs can range from $3,000 to $6,000+. This includes essentials and can be financed if needed.
Essentials: Cleaning supplies, toiletries, and household items may cost around $600.
Moving Expenses: Budgeting $200 to $500 for a self-move, or $800 to $1,200 for a professional move.

3. Ongoing Expenses:

Rent and Utilities: Anticipate monthly rent payments and utility bills, which could total $400+ monthly.
Pet Fees: If applicable, budgeting around $50/month per pet.
Food/Entertainment: Allocating a sufficient budget for groceries and entertainment.
Debt Payments/Obligations: Factoring in other financial responsibilities like debt payments, car payments, and educational expenses.

4. Rule of Thumb Affordability:

Following the guideline of spending approximately 30% of annual income on rent, considering personal debt and financial situations.

5. Ways to Save Money:

Suggestions from financial experts, including minimizing restaurant spending, smart grocery shopping, switching to a lower-cost cell phone plan, tracking spending, and maintaining savings in a high-yield account.

6. Other Factors:

Considering location-specific factors, such as broker fees and additional upfront costs in cities like New York.

7. Summary and Caution:

Advising a minimum of $8,000+ for a 1-bedroom and $12,000 for a 2-bedroom apartment, emphasizing individual variations. Encouraging readers to evaluate the 30% affordability rule and allowing for a financial cushion.

In conclusion, this article serves as a valuable guide, providing a comprehensive overview of the financial considerations associated with renting an apartment for the first time. While not offering financial advice, it encourages readers to seek professional advice and emphasizes the importance of a tailored budget aligned with individual needs.