Congratulations! The hunt for your newfound independence is on, and the first step… Renting your first apartment!
Do you choose the resort-style pool or the CrossFit-inspired gym? What about a large living room space or a walk-in closet? When it comes to shopping for a new apartment, the options are endless. However, a dream apartment with high-end amenities is often accompanied by a hefty price tag.
So, what do you do when you start asking yourself “How much rent can I afford making $18 an hour?” Keep reading to find out exactly how to budget* for an apartment and unforeseen expenses to consider before signing a lease!
How Much of My Income Should Go to Rent?
Before signing a lease for your dream apartment, you have to be able to answer one key component: Can I afford it?
The first step before shopping for a new apartment is to take a closer look at your monthly income. This will include your salary, freelance or part-time job opportunities, and any financial support you may receive (thanks, Dad). Focus your attention on your income after taxes to get a realistic picture of what you can afford.
The 30% Rent Rule
The 30% rule is a popular baseline for determining how much of one’s income should go towards rent. The rule says that no more than 30% of your gross income should be spent on rent.
Let’s take a look back at our original question of rent when it comes to making $18 an hour. If you make that amount in a full-time position that delivers a paycheck twice a month, your monthly income before taxes is roughly $1,440.
Following the 30% rule, this means that you could spend about $432 per month on rent. *cue the tears*
While this rule is a solid guideline, it’s not always realistic advice. Living in more expensive cities like New York or Los Angeles, where rent is oftentimes over $2,000 for a one-bedroom apartment, makes adhering to the 30% rule almost impossible.
Top Five Renting Expenses to Consider Before Applying
Unfortunately, renting an apartment is typically accompanied by more expenses than just the monthly rental price tag. Here is a quick “first apartment checklist” when it comes to building a budget before move-in day.
- Moving Expenses
After signing a lease, you are given a move-in date to officially start relocating all the stuff you’ve collected over the years into your new space! This means that the Pottery Barn solid wood dresser and your Rooms-to-Go sectional couch will have to find a way out of your old place and into the new.
And unless you have some friends willing to move these large and heavy pieces of furniture all for a pizza, you might need to invest in professional movers. It can cost hundreds, if not thousands, of dollars to hire movers, depending on the amount of stuff you have and the distance of the move. - Out With the Old, In With the New
Making a new space feel like home means spending extra cash on new furniture or appliances. While sometimes selling old furniture is easier and cheaper, keep in mind that you’ll still need funds to furnish your new place. - Are Utilities Included in Rent?
Depending on your specific apartment complex, utilities such as trash, electricity, and water may already be factored into the rental expense. If not, you may be looking at some additional strain on your budget.
Research the average cost of utilities in the area you are moving to in order to determine if the rental expense, in addition to the utilities, works for your current income and budget. - Renter’s Insurance
Whether you are just moving out of your parent’s house or have been living the van life, you may never have had to dive into the world of renter’s insurance. In the case of an emergency, having active renter’s insurance can help protect your belongings in a worst-case scenario.
Renter’s insurance is a requirement for certain rental complexes, so start reaching out to insurance agencies for quotes. - What is Prorated Rent?
If you find yourself moving in the middle of the month, you may come across something called “prorated rent.”
Prorated rent is the rent charged for less than a full month of occupancy. In this case, you would only pay for the number of days of occupancy, not the entire month.
You shouldn’t have to worry about how to calculate your prorated rent amount, as your new complex will do the math for you–just be prepared to pay a discounted rent on your new place and a month’s worth in your old place.
Where to Save and Where to Spend
Determining the amount of your income to put towards rent starts with a bigger-picture approach to your overall budget.
It’s important to look at variable expenses, like groceries and entertainment, as well as calculating your fixed expenses, like student loan payments. If you don’t have a budget to outline your expenses, consider creating a 50/30/20 budget spreadsheet to help!
If you can’t move past the luxury apartment complex with a pool and cabana, look for places to maximize your savings. Keep your eyes peeled for move-in deals, start clipping coupons, or even consider a roommate. Determine your priorities and see what works for you to live comfortably!
One Small Step for Man, One Giant Leap Towards Your First Apartment
Building an apartment budget and hunting for your first apartment can throw your finances and stress levels into overdrive. Still, by following our tips, you’ll be able to find what works for you to live comfortably and enjoy all your new place has to offer–without breaking the bank!
At Auto Money Title Loans, we believe in helping people on the path to financial freedom and independence…one budget and step at a time.
Published May 2024
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Reviewed by Executive Team Member at Auto Money
Auto Money offers over 80 locations across the Southeast for individuals seeking extra cash for last-minute expenses like auto repairs, wedding costs, medical bills, and more. As title loan lenders, we practice transparency and compliance with codes and regulatory statutes presented by the SC Department of Consumer Affairs & SC Board of Financial Institutions, Consumer Finance Division.
*For Educational Purposes Only: The information provided by Auto Money is for educational purposes only and is not intended as legal advice. For legal issues, you should consult your own attorney or seek advice from a legal professional. All financial advice should be consulted with a certified tax expert or fiduciary.
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