Creating a Budget as a Renter

Introduction

Are you new to the apartment-renting scene? If you’re a new renter, one of the things you’re probably most concerned about is your financial situation. If you’re considering moving into a new place, it’s a good idea to have a plan for how you want to allocate your budget before you sign a lease. Keep reading for tips about how to budget for your first apartment.

Start With Your Income & Decide What You Can Afford

For most apartment buildings and properties, the typical expectation is for an applicant’s gross monthly income to be at least 3 times the monthly rent. If this isn’t the case for you, that’s okay! You can still be approved for an apartment; the management may just require a bit more information about your banking history or a bigger deposit. Some may even suggest that you try to get a co-signer (for more details on co-signing, check out this post.) 

A good rule of thumb to remember is that you should only be spending about 30% of your monthly income on your rent. Your Perch agent can also be a helpful guide in navigating these steps.

Calculate (or Estimate) Your Monthly Fees and Expenses

For most rental properties, you can expect living expenses in the form of rent and utilities. Some apartments require you to negotiate your own energy and internet providers, while others may include all utilities in their rental pricing. You also need to take into account your personal living expenses like groceries, insurance, gas, etc. 

In addition to typical rent and utilities, some apartments may have additional fees for things like reserved parking spaces, valet trash services, pest control, and pet rent. All of these can vary based on the city you live in and the apartment community you choose. You should also account for renters insurance pricing, which can vary based on your coverage plan and provider. Most properties require you to have your own policy in place before moving in. 

Keep in mind that you will also be paying one-time application and apartment admin fees when applying for your new place. You can expect these fees to range anywhere from $200-300, to cover things like credit and background checks.

Pick a Budgeting System That Works for You

While there are many different options when it comes to choosing a budgeting system, one of the most commonly-used frameworks is the 50/30/20 Rule. The 50/30/20 Rule is a simple and straightforward approach to calculating your first apartment budget:

• 50% of your monthly income is allocated to necessities (ex. rent, groceries).
• 30% is used for things you want but don’t necessarily need (ex. streaming services, dining out).
• The remaining 20% is automatically deposited into savings or used for loan repayment and debts (ex. student loans). 

The 50-30-20 Rule is a great way to keep your finances in check and maintain a sustainable budget while renting an apartment. It’s also highly customizable, so as you become more confident in your financial management, you can break the percentages down into more specific categories depending on your personal goals.

Let Perch Help With Your Apartment-Hunting Needs

At Perch, we know that renting your first apartment can be a bit overwhelming. But if you get a head-start on planning things like your budget, it can make life a whole lot easier down the road. Still feeling stuck in the apartment-decision phase? Perch’s locating agents are the apartment-hunting friends you never knew you needed. We’ll help you research, tour, and apply for apartments that fit your needs and budget, no matter what they are.

Oh, and did we mention our services are free? Fill out a contact form today to get in touch with an agent, or make an appointment at one of our offices. We can’t wait to help you find your place to land.