You have a good job and some money in the bank. It even feels like now might be the right time to move into your own place.
Approximately 34.7% of young adults live with their parents, and these are people between the ages of 20 to 34. The other 65.3% move into their own places.
Moving out is expensive, and that’s the primary reason that young adults stay living with their parents for so long.
If you think you’re ready to move out, you might be wondering, “how much money should you have saved up before you move out?”
Moving out on your own is a significant commitment, so you’ll want to prepare for it. To prepare, you’ll need money.
So how much money should you have at this point? If you’d like to know the answer to this question, continue reading to learn more about this subject.
The Amount You’ll Need to Rent an Apartment
You can avoid moving back to your parents’ house if you save enough money before moving out. So how much should you save? An excellent place to start when answering this question is the cost of renting an apartment.
The average cost of renting a one-bedroom apartment in Canada is between $1,080 to $1,300 a month. Therefore, you’ll need to start by having at least this much money saved before you move out.
Don’t forget, too, that you can’t rent an apartment without paying a security deposit.
The cost of an average security deposit is the cost of one month of rent. If you rent an apartment for $1,080 per month, the security deposit will likely be $1,080 too.
If you add this up, it equals $2,160. So you’ll actually need this much money saved up to move out. While this is an essential cost of moving out, it is not the only expense you’ll have.
You’ll Need Extra for Utilities, Groceries, and Home Furnishings
As you add up the costs of moving out, you should have your rent costs on your list so far. The next expense to add to your list is the costs for all the extras.
What are all the “extras” you might wonder? They’re the things you must pay for in addition to your rent. Here are some of the costs you might encounter.
Some utility companies ask for monetary deposits before turning on the services. You can call the companies to find out if they charge deposits and the costs for them.
Do you have all the furniture you need for your new place? Do you have kitchenware, sheets, and a shower curtain? These costs add up quickly, so you should consider how much you might spend on them.
When you move into a new place, you won’t have any food until you go shopping. You might want to plan to spend at least $200 stocking your refrigerator and pantry.
Think about all the other things you might need to pay for when you move out and add these costs to your list.
You Should Consider Making a Budget
As you can see, moving out is not cheap, which is why you should consider creating a budget. A budget lists your income and expenses, and it helps you control your money.
Creating a budget before moving out is always a smart move, as it can help you see if you can afford to move out and how much money you should have saved up before moving out.
When making a budget, don’t forget to add all the extra expenses you might encounter each month. Once you finish the budget, look at the difference in your income minus your expenses. Is there enough left over for you to survive?
If you feel like you’re cutting it too close, you might want to save a little more before you move out.
You Should Aim to Pay off Your Debts
Another good idea is to pay off all your existing debts before moving out. If you don’t have debts to pay when living in your new unit, you’ll have fewer expenses. With fewer expenses, you’ll have fewer challenges paying your bills.
Being debt-free makes budgeting easier, and it makes life more enjoyable. There is a freedom you can feel when you pay off your debts, which is always a smart move before setting out on your own.
It Helps to Have an Emergency Fund
Finally, when you’re adding up how much you need to have saved before moving out, you should consider creating an emergency fund.
An emergency fund provides something to fall back on if you experience a problem. For example, suppose you lose your job and have no income for a few months. With an emergency fund in place, you’ll have money to use to pay your bills.
The amount you need in an emergency fund is up to you, but you should aim to have enough to cover three to four months of bills.
If your monthly bills cost $2,500, you should try to have at least $7,500 to $10,000 saved in this fund. This is the minimum amount you should save in your emergency fund, but you can always add more to it.
How Much Money Should You Have Saved Up Before You Move Out?
So how much money should you have saved up before you move out? The answer depends on many things, but it’s always a good idea to have enough before you move out on your own.
If you are not yet financially ready to move out of your parent’s home, you should start working on your finances now. If you start now, you’ll be ready faster.
If you need help managing your finances, it might be helpful for you to take a loan to pay off some of the debt you currently have. We offer loans and can help you get on track with your finances.
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