She wants to make sure she's ready to move out

Do I Have Enough for My First Apartment?

by Gary Foreman

It's been over two years since I graduated from college and I've been living with my parents since then. I've put aside money from a part-time job, but I'm not sure it's enough. How much should I have saved to get to the point where I can rent my own first apartment?

Good question! And, it's one that a lot of young adults are asking. Your generation is not only faced with a tough job market, but also many of you got degrees that aren't very marketable. The result is that a lot of 20-somethings can't find the high-paying, full-time jobs they expected. And they end up back living with their parents.

According to Pew Research, over 20 percent of 25-34 year olds live in a multi-generational household. That's the highest percentage since 1950.

But, the fact that you have a lot of company doesn't make living with your parents any easier, so naturally you're anxious to get your own place. Let's see if we can figure out what it would take to move out. And, also what it will take to stay in the apartment, so you don't boomerang back again.

It sounds as if you might have enough saved up for the initial outlay. I can't give you exact dollar amounts because rents vary. But I can tell you that you'll be expected to come up with first and last month's rent plus a damage deposit.

Now is a good time to check your credit score. Many landlords will do a credit check before offering you a lease. If your score is too low, they might not want you as a tenant. And, some will ask for a higher damage deposit if your score is low. You might also find an error in your report (approximately 25 percent contain errors) that you'll want to correct.

Beyond the initial rent and deposit, you'll also need enough cash to set up the apartment, including the cost of any utility deposits.

Don't forget any items that you'll need to buy. Do you have cookware? Basic cleaning supplies? Furniture? Some things you can live without temporarily, but total up the stuff that you'll need to buy when you move in.

Once you're convinced that you have enough to cover the initial expense, the next challenge is whether you'll have enough for the month to month bills.

As a general rule, you don't want your housing expense (including utilities, insurance and maintenance) to be greater than 35 percent of your take-home pay. This is especially true if you're still paying on student or auto loans. Then you're better off trying to stay under 30 percent.

Related: Pay Off Your Student Loan Debt Early or Invest?

You'll be tempted to ignore this and stretch it to 40 percent. You might even juggle some budget numbers to make it all seem okay, but it won't be. Sooner or later, you'll have an unexpected bill or shortfall in income.

If you're working part-time, you'll probably have trouble finding a place that fits within your income. One solution would be sharing a place with friends.

Related: 13 Secrets to Successfully Taking In a Roommate

It's also unlikely that rent will be your only monthly expense. You may need to pay for utilities or homeowners' insurance.

Are you currently contributing to the groceries in your parents' home? Just because Mom is willing to feed you now, don't assume that she'll stock the fridge in your new apartment. You'll probably have to do that yourself and pay for it as well.

Finally, take a moment to consider if your paycheck is secure. Even if you could find a new job in a few weeks, could you handle the gap between checks?

Now is the time to start saving for your future.
Compare money market rates with our best rate finder.

Don't cut your finances too close. If you should find that you're in over your head, you'll not only feel bad about it, but you could do damage to your credit score.

One way to test how ready you are is to take the amount you'd pay for rent and set it aside. Then try to live on the remaining amount. Doing that for a few months would simulate what rent would do to your finances.

I don't know if you're financially ready for that apartment now, but whenever you are ready, I hope that you find the perfect place!

Reviewed January 2018

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Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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