You’re moving in to your first place. Maybe you are living with three roommates or maybe you are living completely on your own. Whatever your situation is, you are likely going to have a lot more expenses than you anticipated.
An important step towards ‘adulting’ is setting a budget. But we hear this time and time again and don’t always take it to heart. Or we make the mistake of forgetting to budget for our Netflix subscription and the late-night Uber Eats meals. When managing your money and bills for the first time it is vital to be aware of all your expenses.
What expenses will you have?
1. Rent. The largest portion of your income will likely be going towards rent. The classic 50-30-20 rule is a classic for a reason. This rule states that 50% of your income should be spent on essentials, 30% can be spent on wants, and 20% should be put away for an emergency fund or savings. This puts you at spending approximately 30% of your income on rent. Also consider using auto pay. This will save you from any expensive late fees.
2. Utilities. A new apartment also means paying for electricity, heating, and water bills. There are many ways to keep these costs low such as turning off all lights when you leave a room, unplugging appliances and lamps when not in use, and taking shorter showers. These expenses will fluctuate each month depending on your habits.
3. Cable/Internet/Phone Bill. Now a days many people, especially young people, opt to cut the cord and use streaming services. Event if you opt out of having Cable you will need Internet to use these services. Some apartments include this, so ask your landlord before purchasing.
4. Streaming Subscriptions. If you do decide to opt out of Cable, then you have to cons8ider the cost of your streaming sites. Many companies offer bundles. For example, Hulu, Disney+, and ESPN+ can be purchased together or Netflix and Spotify. Do your research before you purchase each subscription separately.
5. Car Payments and Gas. If you have a car you will need to pay car insurance monthly. If you have just purchased your car, you may also have monthly loan payments you have to make. You should also calculate how often you will need to fill up gas depending on your commute and driving habits so you won’t wind up overspending. Depending on how good you are at saving, you may even want to budget for routine maintenance like oil changes.
6. Food. Consider your eating habits and how often you eat. Cooking meals at home is a great way to save money and is often a healthier option. Set aside money for not only groceries and toiletries, but money for going out to eat.
7. Credit Card Payments. A good rule of thumb is to only use one credit card. To avoid credit card debt, be sure to only spend what you can pay off each month. If you have an emergency and can’t pay off an entire balance, be sure to at least make the minimum payment to avoid lowering your credit score and higher interest rates. If choosing a credit card for the first time, find one with a good rewards program like cash back. Don’t count this in towards your budget as it varies based on your spending, but it can be a good way to have some extra cash to treat yourself without taking it out of your budget. Or it can be used to lower your balance if you have gotten behind on your payments.
8. Insurance. Health insurance and renters insurance are both expenses you may have never paid before moving into your own place. Some work places offer health insurance to their employees and pay a share of the costs. Renters insurance is not always required but it highly recommended to keep your belongings safe from theft or damage due to covered losses such as a fire. A renters insurance policy also gives you liability coverage.
9. Entertainment. At the end of your budget you don’t want to realize you have no money left for fun outings. Set aside money for whatever activities you enjoy. This includes renting a movie on Apple TV, shopping for clothes, going out for drinks with friends, or using a Bird Scooter. Include all your anticipated expenses.
Setting a budget will help you show your independence, keep you from going into debt, and alleviate stress. Budgeting apps can help you organize all of your expenses and give you insight on where your money is going. There are also online budgeting calculator options to help determine how much you have to spend after taxes.
Creating a savings fund, setting (and actually sticking to) a budget, and being aware of all the ways you spend money in your life can help set you up to be in a safe place financially and ready for the unexpected expenses life will throw at you.
Article By: Mia Tramontana
References: Apartment List