Whether you're fresh out of college in your early 20s or you've been thinking about this for a while, it can be both exciting and terrifying to move out of your parent's house and live by your own rules. Besides finding the right place, one big question on your mind is probably, “How much money do you need to move out?”
While there's no one-size-fits-all answer, you can get a ballpark figure by considering usual expenses. With insights from Certified Financial Planner and entrepreneur Steven Kibbel, we created a checklist to help you map how much money you need to move out.
How do you calculate how much you need to move out?
Moving out is a big decision that marks the beginning of your personal growth, but the scary financial part can be tamed with lots of planning, budgeting, and knowing how to make smart decisions.
Here are key factors you should consider to figure out how much money you need to move out of your parent’s house to your first apartment:
1. Upfront costs:
- Security deposit: Typically one to two months' rent. A pet deposit also might be applicable
- First month's rent: Required before you move in
- Moving expenses: Costs for hiring movers, renting a truck, or purchasing packing supplies
- Furniture and household items: Costs for beds, sofas, kitchenware, and other essentials
- Utility Setup Fees: Fees for setting up electricity, internet, water, and other services
2. Ongoing living expenses:
- Rent: Ideally, rent should be no more than 30% of your monthly income
- Utilities: Monthly costs for electricity, water, internet, and other services
- Groceries: Regular expenses for food and household supplies
- Insurance: Renter's insurance for protection in case of an emergency
3 tips to financially prepare to move out
To make this transition smooth and stress-free, it's crucial to be financially prepared. From ensuring a stable income to mastering budgeting and building an emergency fund, these tips will set you on the right path toward a successful move.
1. Income: ensure you have stability
The first step to pursuing your desire to move out of your parents is having a crystal clear vision of your current financial situation. Consider your current and future income to ensure you can afford it.
“Make a detailed list of every avenue that contributes money coming in regularly,” says Kibbel. “You want to calculate your total income precisely. I can't stress enough how important this step is.”
Consider not only the amount coming in—income stability is key. As a young adult, make sure you have a consistent source of income that will cover all of your living expenses, still leaving room to save.
Ideally, you'll want to find a permanent, salaried career or a consistent part/full-time job with predictable compensation. “While extra income from freelance work can be beneficial, I recommend not relying solely on variable income sources when first establishing independence,” Kibbel says. “The volatility of these earnings makes it difficult to budget well, and it can rapidly lead to falling behind on obligations if employment slows suddenly.”
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2. Budgeting: creating a detailed and realistic move-out plan
With your total income and full scope of expenses listed, you can build a realistic monthly budget for your new living situation. Ideally, your rent should represent up to 30% of your salary. Also expect to pay moving expenses, security deposits, and other initial costs when transitioning to your new home.
Your budget should be as detailed as possible and include all costs associated with living independently. Focus on crucial expenses, and divide them into two categories: fixed and variable expenses.
Fixed expenses, like rent, groceries, and insurance, should be prioritized. Variable expenses, such as entertainment, shopping, and eating out, are also important to maintain your well-being but can be adjusted in a tighter budget.
The envelope system is one of Kibbel’s favorite budgeting methods for beginners and visual learners. “There's something satisfying about physically separating cash into labeled envelopes for different expense categories like rent, utilities, and groceries,” he says. “Having to move money from an envelope to spend it creates a tactile, visceral connection to your budget. It makes going over budget harder when you see the rent money dwindling too soon.”
Another approach he recommends is the budget 50/30/20 rule, which suggests splitting your monthly after-tax income into needs, wants, and savings:
- 50% to needs
- 30% to wants
- 20% to savings or debt payments
Getting into the habit of tracking dollars in and out is a vital skill.
3. Build an emergency fund
After figuring out your income and budget, it's time to think preventively about the future. When you move out of your parent's house, your monthly expenses will increase, and your savings need to adjust accordingly. The general rule of thumb is to save enough to cover six months of rent, providing a safety net in case of unexpected expenses or emergencies.
Moving out FAQs
Moving out on your own as a young adult is a significant milestone that requires careful financial planning and preparation. By understanding the upfront and ongoing costs, stabilizing your income, budgeting wisely, and maintaining an emergency fund, you can confidently take the leap toward your personal growth.
Review these commonly asked questions to make sure you're ready to move out of your parents:
1. Is $5,000 enough to move out?
It depends on your location and the cost of living there. In some areas, $5,000 may cover initial moving expenses and a few months of rent, but might not be sufficient in more expensive cities.
2. Is $20,000 enough to move out?
$20,000 is a more comfortable cushion, covering initial expenses and providing several months of living costs. It gives you more flexibility and a safety net.
3. How do you calculate how much you need to move out?
Calculate initial moving expenses (security deposit, first month’s rent, moving costs), ongoing living expenses (rent, utilities, groceries), and save an emergency fund of six months' rent.
4. What are some good budgeting apps?
Popular budgeting apps include Mint, YNAB (You Need a Budget), and PocketGuard. These apps can help you track your expenses, set budgets, and manage your finances effectively.
