You’ve nailed down the area where you want to live and you’re scouring Rent.com to find the best apartment for your budget. However, there’s more to renting an apartment than just the rent. Other charges, bills and your income can have a huge impact on what kind of apartment you can afford. Having an idea of your monthly budget before you sign your name on the dotted line is crucial to ensure you’re not in over your head money-wise. The rule of thumb is you should spend up to 30% of your income on housing. To figure out this number, divide your gross or pretax earnings by 40. For example, if you make $40,000 a year, you should be able to afford $1,000. But here’s where millennials get it wrong. They forget about all of the other expenses that come with renting an apartment. Here are some additional charges that you should include in that new $1,000 budget.
Depending on where you live, utilities can really add on to your monthly outgoings. For example, an apartment in Chicago where the winters are bitterly cold can make heat a bigger cost than an apartment in Atlanta, where summer air conditioning costs would be a bigger hit to your budget. If your budget is 1000 and your utilities cost $250 per month, renting a $900 apartment will put you out of your budget. When you are viewing apartments, ask the apartment manager if they can advise on average utility bills at their complex or in that city. Some of the utilities you can ask about are:
- Waste Disposal
Some apartment communities may have a standard charge for these utilities where a flat fee will be added on to your rent. If utilities are included, you need to ask about that upfront. Understanding these charges can help you prepare for what your actual cost per month will be to rent an apartment.
Your apartment may also have some additional charges and fees that you may not be aware of upon first glance. For example, if you have a pet, there are oftentimes additional pet deposits, or even a monthly “pet rent.” Perhaps you need all the channels to watch football, or want high speed internet to run your business from your apartment. You don’t want to forget these monthly expenses when you are calculating how much you can spend in rent. Other additional charges you should consider and ask about prior to renting your new apartment include:
- Storage fees
- Garage or parking fees
- Renter’s Insurance
- Pet fees
- Washer and dryer fees
Though getting a monthly budget together can seem like a heap of sadness, it can actually help you be prepared to rent an apartment you can afford. Be aware of what you can and can’t spend, and you’ll be moving into your dream apartment sooner than you think!
Personal Debt and Expenses
You’ll also need to create a budget for your personal monthly outgoings. Expenses such as food, student loans, gym memberships, transportation costs, and others should also be taken into account when you’re checking your spending. Many people have personal debt that requires a monthly payment. Car loans, student loans and credit card bills can all take a bite out of your monthly budget. Additionally, you may have loans where you borrowed from family members that you’re paying back. Add these outgoings up and see what you’re paying out monthly. This will also play a factor in determining if you can afford the apartment you have your eye on. Before you get overwhelmed, there are many budget templates you can download online to help you keep tabs on it.
What are some money saving tips you use on a monthly basis? Have you ever had to tighten your financial belt to afford your apartment?