Financial

I’ve been living with my parents for the last year and when the world reopens, I’m ready for change. How should I prepare to move out?

So, not unlike many of our clients at the Gym, you bailed on your big city tiny apartment and giant rent burden in favor of getting through a tough time without bleeding cash. Good for you for making a wise financial choice!

Still, despite the charms of living in your childhood bedroom and having a concierge grocery service, you may be itching to re experience the freedoms of your own place. Somehow you did this before without missing a beat, but now with your new savings rate and bill-free living, stepping back into the world of the rent-paying adults seems more daunting than it once did. Lucky for you, we’ve been feeling this question a lot lately and we’ve got you!

Like most things at The Financial Gym, the short answer to this question is that you need to get a plan. And like most plans, this one needs some numbers. Before you make any sudden moves, you’ll need to do some research and put some numbers together. Here’s how you can get started:

  1. Research rents in the area you want to live in. Get a sense of what the market is like, if it’s changed and if those changes have opened up or limited your possibilities.

  2. Know what you can afford. Typically your rent is affordable if it is no more than than 25% of your take home pay. We know that this can be difficult to achieve in expensive cities, but try as hard as you can not to become rent burdened. Housing costs that approach 50% or more of your income are almost always a bad idea and will make you very rent burdened.

  3. Estimate how much you’ll need to pay for utilities. This should include phone, wifi, electric, heat, water, sanitation, and whatever else you need to cover. When in doubt, round up the numbers.

  4. Practice paying your rent by opening up a high yield savings account and depositing the amount equivalent to your estimated costs in that account. That means that if you plan on paying $1,200 in rent and $300 in utilities, you need to deposit $1,500 per month into that account.

  5. Rinse and Repeat. We recommend that you do this for 3 months to get the best sense of whether your target rent is affordable. We know that sometimes we have an expensive month, sometimes we have a cheap month, and together those figures become our average cost of living. Once you’ve saved for 3 months, you’ll have your first month’s rent, broker’s fee, and deposit, and you’ll know you can handle the costs!

There you have it. 5 steps to get your back to the freedom of living on your own! Of course, we also recommend that as you are figuring out what you can afford, you make sure you leave room for saving for the other important areas of life: your emergency fund, retirement, and things that you value, like travel or keeping up your beauty routine. 

We know that this is easier said than done. If you think you could use some support along the way, talk to your trainer, find an accountability buddy, or call us to find out more about working towards your goals with the Financial Gym.



Source
I’ve been living with my parents for the last year and when the world reopens, I’m ready for change. How should I prepare to move out? is written by Terri Bennett, A Certified Financial Trainer for financialgym.com

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