Renting an apartment provides you with many perks like the ability to move relatively easily, low home maintenance costs, and typically, ready-to-use appliances. Yet even with these cost-saving considerations, as a renter, you need to be aware of how to make the most of your budget. Whether you hope to purchase a house or you are preparing for an addition to your family, you will want to keep your costs low to push you towards your next financial goal.
Budget Breakdown for Renters
Start by tracking your expenses. With a quick online search, there are several free or low cost online budgeting tools available which you can easily download and begin using. Next, categorize each expense by the type of transaction such as food, car, utilities, and transportation. This can be done easily through your budgeting tool or by writing out everything via pen and paper. Finally, each category will be a part of your total monthly budget. In this next section, you will see a percentage of the total amount. It is important to consider that every budget will be different, so feel free to adjust this template according to your individual needs. Here are nine budget breakdowns for renters to consider.
- 30% Housing
- 10% Housing expenses (including utilities and renter's insurance)
- 15% Food
- 10% Transportation (car loan and car maintenance)
- 10% Debt repayment (credit cards, student loans, and other personal loans)
- 10% Savings
- 5% Clothing
- 5% Entertainment
- 5% Miscellaneous personal expenses and car insurance
How Much to Save Before Going on Your Own
Before you decide to move out of Mom and Dad's house, make saving a priority. Put aside between 30% or more of your monthly income for your new rental. In addition, factor in additional moving expenses such as furniture, internet packages, security deposits and other up-front costs. These expenses are typically forgotten but can easily destroy your budget without too much effort. Ideally, you will want to have between three to six months of your rent saved, plus any additional living expenses to use in an emergency. This will help to cover pesky costs associated with moving and help to put your mind at ease in the event of needing additional cash.
How to Save Extra Money
Saving extra money each month will help to keep you on track with your goals. Here are ten ways to prioritize your goals while still maintaining quality of your life.
- Meal prep for the week and limit eating out
- Cut your phone bill by switching providers
- Use coupon codes through a service like Honey or Ebates
- Cancel cable and switch to streaming
- Buy in bulk
- Cancel unused subscriptions
- Get a roommate
- Carpool or use public transportation
- Have a game night
- Download and complete one of many free budget templates found online
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Stick to your budget
Stay consistent by tracking and reviewing expenses. Set aside a time to analyze how you are spending and look for ways to improve. It's important to constantly revisit your budget (say, once a month) and to adjust when things change—for better or for worse!