Perhaps you just graduated college, got your first real-world job, or are moving to a new city. Whatever the case may be, finding your first apartment can bring major changes to your accustomed budget and spending habits.
Getting your first apartment is one of the first signs of financial independence since it’s likely that any living costs you had while away at college were covered through loans or other help.
As you look around for your first apartment, there are other expenses you’ll have to keep in mind to figure out your total monthly costs. Make sure the total cost is affordable for your lifestyle. Consider these additional expenses when establishing your first apartment budget.
The most obvious of your monthly payments is rent. The range of your rent depends on factors like location, number of rooms, and additional features.
Dive in and research the market in the area where you’re looking to live. Figure out the range of monthly rent and come up with a list of the ones you want to check out. You never know what additional fees apartment complexes or landlords can add. Make sure to give yourself options.
A great tool to help you with your search is to use Zillow’s monthly rent calculator to see how much rent you can afford in the area you’re looking.
2. Heat and Gas
Most apartment units will have you pay for your gas and heat usage monthly unless your apartment building has radiators.
In most places, the cost of heat varies throughout the year. You can expect to pay little to no heating costs in the Summer season. Although it depends on the size of your home or apartment, as it gets colder you’re likely to pay at least $100 per month for heating.
No matter what size apartment you live in, expect to pay for electricity. Typically, your landlord will give you the information about who your electric provider is. You have to contact the company to move the bill under your name.
Keep in mind that if you use an air conditioner unit during the summer months, it falls under your electricity expenses. The Energy Information Administration says most people spend around $1,300 on electricity annually. This comes to a monthly fee of $108.
In this day and age, the internet is arguably the most important utility to most tenants. Most internet providers also provide TV services in bundled deals. Your internet fuels your WiFi, online gaming, and subscription streaming services for your apartment. HighSpeedInternet.com says the average cost of internet services is usually between $50 and $60.
5. Renters Insurance
While it’s not mandatory, it’s smart to look into renter’s insurance for your apartment. Renter’s insurance protects your things in case of any damages from theft, fire, flood or other disasters. These policies are usually inexpensive, costing around $12 per month.
Now that you know what you can expect to pay roughly a month for your living costs, here are some tips for your first budget:
Get Your Credit in Shape
Many landlords check your credit history when applying for an apartment. If you have a poor credit history, it can prevent you from landing your dream unit!
If you don’t know where you currently stand, start by getting a free credit report at annualcreditreport.com. You’re allowed one free credit report per year from each credit bureau. Although these don’t include your credit scores, they list information about every account you have so you can monitor them for accuracy.
If you are interested in finding out your credit scores, turn to your credit card company first. Many offer free credit scores to cardholders, and others like American Express, Capital One, Chase, and Discover offer scores to the general public.
If you’re not happy with your scores, figure out what categories you’re weak in. 65% of FICO scores are made up of your payment history (35%) and any amounts owed (30%).
If you don’t pay your bills on time or have any delinquencies then your score will be affected in the “payment history” category. Meanwhile, if you have high amounts owed relative to your credit limits, your scores will suffer. This is why maxing out credit cards can quickly drop your credit scores.
Set and Tweak Your Monthly Budget
If you have no idea how much you plan to spend monthly on your apartment, then it’s a good time to set a budget. Obviously, the average monthly utilities cost above will vary based on things like your location, your habits, and your unique situation. Use estimates from your local providers to get a ballpark of how much you’ll spend monthly to come up with an initial apartment budget.
After getting an apartment, don’t let that budget go on the back burner. Start tracking your monthly costs and compare them to your budget to see how they line up. The best part about a budget is that changes can be made if you’re not happy with how much you’re spending in a category.
Compare with Friends
If you have any close friends or relatives that live in a similar apartment or location as yours, politely ask what they pay for their utilities, if they don’t mind sharing. This can be a quick and good indication to see if you’re an outlier when it comes to being charged too much. If your costs are significantly higher than someone else in a certain category, ask what that person does to see if there are any tips to cut down on costs.
Congratulations on taking the steps towards moving into your first apartment. Preparing a budget is the first step in taking charge of your household expenses, and will set you up for success in future purchases you make, like buying a car or a home. Do your research to discover what living expenses will be in your desired area, work on maintaining or acquiring good credit, and prepare a budget that is easy to stick to.