How Much Money to Save Before Moving Out
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Determining when it’s time to move out of your parents’ house can depend on a few factors. Usually, either you’re tired of living with them, or they’re tired of having you around.
A better reason to move out is that you’ve saved up enough money to live on your own. With enough cash in your bank account, you can hopefully avoid the first two possibilities that can cause you to move.
But how much is enough? You may have to live paycheck-to-paycheck in your new living situation, whether you have roommates or not, but the transition can be easier if you’ve saved for the initial and recurring costs of living on your own for the first time.
We’ll detail many of the costs, which will obviously vary based on the cost of living in the area you want to live in, so you can get a good idea of how much to save.
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How much money to save before moving out
A rule of thumb is that your income should be triple your rent. If an apartment costs $1,000 per month, then you should earn at least $3,000 each month. Landlords may also follow this rule of thumb when they check your monthly income because they don’t want renters who can’t afford the rent.
Moving into your first apartment has many expenses beyond the monthly rent. Along with the regular, monthly bills of electricity and water, you’ll likely have to pay a security deposit and other upfront costs young adults face in setting up their new home.
An apartment may come with a refrigerator, or you may have to buy or rent one. The same goes for a bed, couch, and other living expenses, like groceries that your parents are no longer buying for you. Thrift stores and secondhand items may soon become your best friends.
We’ll go over those expenses and others, and will give you a national average cost for each expense. Research prices in your area to get a better idea of how much you need to save.
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Start saving money
Before we detail the many expenses of moving into your first apartment, the best way to prepare is to start saving money in a bank account and plan for all of the cash you’ll need to hand out when you move to a new place.
Open a savings account to put this money, and don’t touch it until you move. A high-yield savings account at an online bank can earn you about 0.50% interest, which isn’t a lot, but is better than what many brick-and-mortar banks offer and is better than letting it sit in a checking account.
Save the first month’s rent
Rent will almost always be a lot less in a small city than in a metro area. According to the February 2022 Rent Report by the Apartment Guide, national monthly rental prices are:
- 1-bedroom: $1,688
- 2-bedroom: $1,985
Following our rule of thumb of paying about 30% of your income on rent, you’d need a monthly income of $5,064 for a one-bedroom apartment, and $5,955 for two bedrooms. Get a roommate for that two-bedroom apartment, and your monthly income can drop to $2,977.
Save last month’s rent
Saving for the first month’s rent sounds reasonable, but some landlords will also want the last month’s rent in advance too. Sure, you seem like a nice person and your credit score is good, but maybe you’ll leave before paying the final bill for your monthly rent.
The good news is that if you give the required notice when moving out, the money you paid for the last month’s rent will apply toward exactly that — the last month’s rent.
Pay a security deposit
Another upfront cost of renting an apartment is a security deposit. It can be the same amount as the monthly rent, which can cause confusion about what it’s for. The lease agreement should spell out what each is for and how the landlord can use them.
A security deposit is often used to cover the cost of damages. If there aren’t any, it should be returned to the renter.
A security deposit shouldn’t be used as the last month’s rent, allowing a renter to skip out on paying the final rental bill because they think the security deposit will cover it. Also, landlords shouldn’t use the deposit to cover the rent that’s due.
Application fee
An application fee is often charged by landlords to cover their costs of screening you as a possible tenant. This will likely include a background check and credit check, both of which cost money.
Local and state laws may limit these fees in your area, so they shouldn’t be too high. The three main credit bureaus charge from $25 to $75 for a credit check. A background check to screen an applicant for financial and criminal records can cost $15 to $40.
Start an emergency fund
After paying about $5,000 for your first apartment — considering the national average for a one-bedroom apartment, with first and last month’s rent and a security deposit — starting an emergency fund for something that may never happen can seem like a waste of time.
Ideally, an emergency fund should cover three to six months of living expenses, including rent and every other cost you have. With a monthly income of $5,064 needed for an average one-bedroom apartment, that means saving about $15,000 to $30,000 for emergencies.
Your monthly expenses may be lower than your income, but many people starting their careers live from paycheck to paycheck. But saving $15,000 or more for an emergency fund? That’s probably impossible for most young adults starting their careers or college, let alone the average American.
Emergencies will happen, whether you plan for them or not. Car repairs, hospital visits, and job loss are some of the biggest. If possible, try saving at least one month’s salary in an emergency fund, which should have just as much liquidity as a savings account.
Related: How to Start an Emergency Fund
Debts
Paying off any debts before moving out on your own is preferable, but maybe not possible. Student loans, car payments, and having a balance on your credit cards all add to your monthly expenses.
Here are the average monthly payments for those three debts:
If you don’t have any of these, congratulations. If you do and can’t eliminate them before you find your first apartment, then add them to your monthly expenses.
Renter’s insurance
Renter’s insurance is one of the cheapest expenses of being a renter, and it’s optional. For about $15 per month, you can insure your belongings in your rental property against theft or damage, such as in a fire or flood.
Renter’s insurance can also pay for additional living expenses, such as hotel bills if your rental unit is damaged and left uninhabitable. It may also provide liability coverage in case you accidentally damage someone else’s property or are found responsible for a guest’s injuries and need to pay their medical bills.
Related: Best Renters Insurance Companies
Use Quicken Loans to Get a Personal Loan
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Living expenses
Some living expenses you may have paid when living at your parents’ house, so they won’t be a shock to your finances when you move out. These may include groceries, transportation, clothing, and some utility costs if you’re feeling generous.
These are essential living expenses, and you may not be paying all of them. Do your parents pay for water, electricity, healthcare, garbage pickup, and internet service? Then you should expect to add those essentials to your budget when you move out for the first time.
If your job is a 30-minute drive and you don’t have a car, then you’ll want to add car payments or other transportation costs to your budget. You could save money by taking the bus.
We won’t go into how much each essential living expense costs, but it’s worth knowing that the average monthly expenses for one person totaled $3,189, according to the most recent data released by the U.S. Bureau of Labor Statistics in September 2020.
There are also non-essential costs, meaning they can probably be cut if necessary. These include entertainment, dining out, alcohol, vacations, sporting events, gifts, and pets.
Moving costs
Moving costs shouldn’t be too high, depending on how far you're moving. Hiring movers is usually the most expensive route. Find a few good friends with trucks who are willing to help and you may only be out gas money and pizza.
Professional movers for a local move cost $300 to $3,500, depending on the size of the move. Cross-country moving costs can range from $2,400 to $10,600, depending on the size of the move and the distance.
Packing supplies such as moving boxes can cost up to $100 or so, depending on the size of the move.
Related: First 5 Steps of the Moving Process
Total costs
The total costs of how much you should save before moving out can be overwhelming. Paying two months’ rent and a security deposit may be more than you had planned for, and may send you back to your parents for another six months or so to give you some time to save more money for your first move.
If your credit score isn’t so good, it can take you at least a few months to improve it enough so a landlord thinks you’re likely to pay the monthly rent on time.
But let’s say you have no debts such as student loans, won’t fund an emergency fund immediately, own a truck to move your stuff, won’t buy renter’s insurance, and will have enough money each month to buy groceries, pay utility costs and other essentials.
Your main bill each month will be the rent, which for a one-bedroom apartment averages $1,688. Follow the rule of thumb that rent is one-third of your income, and your monthly income should be $5,064. If that’s your monthly income, then you should be able to afford the average apartment.
Getting a roommate and splitting the costs of monthly expenses and rent may now seem like a viable solution.
Pros & cons
Pros
- Renting an apartment on your own is one of the first big signs of financial independence and being an adult. Congratulations!
- Following the rule of thumb of not spending more than 30% of your monthly income on rent can help you shop for apartments in your price range.
- Paying off debts such as student loans and credit cards will add money to your budget.
Cons
- Spending more than 30% of your income on rent may mean cutting expenses, starting with non-essential ones such as dining out and alcohol.
- You may have to move to a suburb or cheaper city if you can’t afford rent in a city you prefer.
- You may need to live with your parents for a few more months so you can save for the upcoming expenses of living on your own.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
The bottom line
Now that you know how much money to save before moving out of your parents’ house, it’s time to put your plan into action by starting a savings account specifically for this purpose. Without it, moving out can be a lot more difficult than it needs to be. Starting a “moving out” budget can help you start the habit of following a budget, which can help with many other savings goals throughout your life.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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