Moving into a place of your own is a major life milestone that brings newfound freedom and independence. Undoubtedly, this new level of responsibility comes with a price, but by planning ahead before moving out you can make it an easy transition. Here’s how you can thoroughly prepare for the adventure before packing up your boxes:
Ensure Your Credit is in Good Shape
Landlords are often particular occupies who they let occupy their properties. To get a snapshot of a potential tenant’s financial health, landlords may perform a credit check, require references and request recent pay-stubs. A credit check will reveal your credit score which is a reflection of monetary habits. Credit scores are determined by payment history, total debts, length of credit history, credit currently being sought, and types of credit in use. When applying to be a renter, a healthy credit score will boost a landlord’s confidence in your ability to pay rent in full and on time. If your score is less-than-healthy, the good news is there are ways to actively improve your credit score. Your bank may also be able to provide your credit score. Lakeland Bank offers customers the ability to check their score daily using Credit Sense.
Take Control of Spending and Saving Habits
Living independently can bring a variety of new monetary responsibilities, especially if moving out means leaving behind a financial safety net. In order to take greater strides toward successfully living on your own, you may need to redefine your financial priorities before signing a lease. Now may be the time to take control of discretionary expenses for things like dining out every weekend, taking a vacation or regularly buying new clothes. The goal is to have a healthy amount of savings so you can start the journey as a financially secure tenant.
Create a Budget Before You Move Out
It is essential to create a detailed budget to manage your finances. This exercise will bring financial habits that need to be addressed to the forefront. You will see areas of spending that can be reduced and ways to redirect money to your savings account. Most importantly, a precise budget will set expectations for what type of rental and monthly living expenses you will be able to afford. And this will make it easier to live within your means.
How Much To Save
Once you determine how much you can comfortably spend each month, it’s important to save in advance to prepare for the actual cost of moving into your new place. Here are some expenses that you may need to cover before move-in day:
- First month’s rent plus security deposit: Upon signing a lease agreement, you may be responsible to pay the first month’s rent and a security deposit. The security deposit protects the landlord from damage or non-payment and can be equal to one or two months of the monthly rent. So if the rent is $1,000, you might need $3,000 up front.
- Renter’s insurance: Renter’s insurance is the best way to protect your belongings and avoid the significant expenses of paying to replace stolen or damaged items in the event something happens. It is one of the best investments you can make while living in a rental property.
- Added fees: It’s common for landlords to charge a fee for pets, parking or extra storage. Review the lease agreement carefully to know how much these fees are so that you can add them into your budget.
- Moving expenses: whether you pay a moving company or need to rent a truck to move yourself, don’t overlook adding this expense to what you will need to have in advance.
How To Save
Saving money requires discipline and patience. The sooner you take action to make it a priority, the sooner you will reach your goal and be able to move out on your own. Use your budget to look for costs that can be cut out altogether such as subscription services. If money spent dining out is excessive, set a strict limit for each week or month to keep it in check. Limit visits to a grocery store to help prevent unnecessary or impulsive purchases. If you’re a visual person, create a spreadsheet or chart to document progress. It can be encouraging to know that turning down a night out or new shoes is truly moving you closer to your goal.
Obscure Expenses to Remember
When planning to move out, monthly rent is likely the most top-of-mind expense. But remember there are other costs that may impact your budget. It is always better to be over prepared, so don’t forget to consider what these expenses may mean for your budget and savings goals.
- Utilities: Depending on the living arrangement, most utilities will not be included with your rent. This means you will be responsible for paying for electricity, water, gas, cable, internet, and so on. If you will be living with a roommate, it’s important to discuss how these costs will be split before move-in day.
- Furnishings and everyday supplies: When moving out for the first time, you may find there are a lot of items that you didn’t realize you would need, like a can opener, coffee pot or a cookie sheet. Plus, you’ll be responsible to pay for things that you may not have had to worry about before, such as laundry detergent and toilet paper. Prepare to allocate money to cover everyday necessities that can easily be taken for granted.
- Emergency savings fund: experts recommend having at least three to six months of living expenses saved to ensure you have a cushion in the event of an unexpected emergency or loss of employment. It is better for long-term financial stability to have enough money set aside rather than racking up credit card debt during a time of unexpected financial hardship.
Moving out for the first time is incredibly exciting, but it’s important not to take the financial complexity lightly. Be proactive to avoid living paycheck to paycheck. Create a budget, save enough money in advance for move-in day and plan for unexpected expenses and emergencies. While it can be easy to become wrapped up and excited about this new chapter of your life, carefully laying the groundwork will help the experience be just as rewarding when your space is furnished and you can finally call it “home.”