First-time renters will agree with me, it is stressful renting your first apartment. Half of the stress involved is cut out for you, when you save for an apartment prior to moving in. This is because you do not have to worry about unforeseen rental expenses and circumstances with financial repercussions.
To simplify, saving for an apartment guarantees you are not left homeless in case a sudden job loss.
For you to be able to do this well, you will need to save money in a bank account which protects your financial interest. I discussed this on Saving To Move Out: Choosing right bank account. Not all bank accounts are meant to help you fulfill this purpose, but the right one will save your money while paying you interest of up to 5%. The average national interest rate on savings accounts in America is 0.45%, so that tells you saving with the right bank account matters.
When I was in college, I was one of the few people in my friend group who lived independently. Each time I asked the other adults why they lived with their parents, they would save they could not save enough to afford a place of their own. A few of them were making more than me without knowing I was living from paycheck to paycheck. It made me wondered how much they thought is needed prior to moving out of ones parents’ house.
Here are my thoughts on this matter now.
How Much Should I Save For An Apartment?
I recommend saving three to six months of worth of rent before getting one. Personally, I would say to save about $5000 for a three-month financial security. If you could not, save at least $3000 for an apartment. It is enough to get you started. That would give you a month or two lifeline in case of a job loss.
I am assuming you are a single guy or woman looking for a one bedroom apartment.
As a young working class adult with a family, one bedroom apartment is obviously not enough. This is where I recommend saving up to $5000 as a security measure against income disruption. You may ask whether this is possible. Actually, it is possible to save up to $5000. It depends on the kind of jobs you have.
On What Kind Of Jobs You Need To Get A Place Of Your Own episode, I talked about the kind of jobs that will help you accomplish this goal. If you live with your parents, it will be easy to save up to $5000 before moving out. This is because you may come to a sort of arrangement with your parents where you are not required to pay little or no bills.
It is easy to save in that sort of arrangement. Would you agree?
But for the average Joe and Jane who has a family, it is not so easy. This is especially with a bad job or a good job which does not pay much. Hence, why I recommend budgeting for apartment rent for at least six months.
Tips For Saving For An Apartment
To help you accomplish the task of saving for an apartment, I am going to tell you how I was able to raise money for my first apartment. It was not an easy task, but I was able to hit +$4000 in about six months driving Amazon big prime van as a delivery driver years ago.
You do not have to drive for Amazon like I did. In fact, you can do it with any job that pays more than $18 per hour. Below are what will set you on the right path.
1. Use High Interest Savings Accounts
When you save for an apartment, use high yield savings accounts. These types of bank accounts pay interest rates of up to 5%. Your traditional bank will pay you a national average of 0.45%. Do you see the difference?
Now, let us assume you saved $7000 in 12 months in a high yield interest account that pays 4.05%, you will have $7283.5. I will not recommend using your regular savings account. This is because you would save $7031.50 due to its national average interest rate of 0.45%.
Do not get me wrong.
Not all banks pay this national average for their savings account, however most pay around that or less. If I were you, I would use one of these 7 Best High Interest Savings Accounts. Traditional saving accounts are a thing of the past, because they do not do much for the average working class adult. The high yield savings accounts above are free, but some working class adults do not know about them.
Do you know why?
The system wants us to be ignorant and lack the financial luster needed to have financial power. I am not going to go into that today. Anyways, these high interest accounts will help you save for an apartment because you will have more than just your savings at the end of your saving timeline.
2. Set A Saving Goal and Timeline
As a first time renter, the first thing I did was to set a saving goal and a timeline. I set six months as my timeline and $6000 as my saving goals. But, I fell short of the saving goal at the end of my saving timeline.
You see, I was going through a bad time at the time. I need a place of my own to think and breathe. I had to give myself six months to come up with $6000. And, I ended up with $4000 and a few hundred dollars.
Your situation may be different.
Whatever it is, a saving goal ensures there is a specific amount you are working towards. Make this amount realistic and attainable after taking your monthly income and bills into consideration. Then, put a specific amount aside each month until the end of the saving goal and timeline.
3. Budget For Your First Apartment
Budgeting for an apartment helps you know what you can afford to pay. I always advocate not going beyond 45% of your monthly income. Otherwise, it will start feeling like you are slaving your life away just to make rent.
I do not know about you, but that is how I used to feel when more than 50% of my paycheck would go to rent. Not anymore, my friend!
Speaking of budgeting for your apartment rent, here is how I was able to have a head start.
Get a totality of your current necessary and unnecessary monthly expenses. These include car notes, insurance, food and other bills. Subtract it from your monthly income. Whatever remains, should be committed to a bank account for savings.
Finally, it helps to cut off unnecessary expenses and redirect the money to savings. At least for the time being, until you hit your saving goal. It is one of the fastest ways to accomplish the saving goal. Read Creating a personal budget for how to go about making a solid budget that keeps you in line.
4. Sell Things You Do Not Need Anymore
You can start saving for an apartment by selling things you do not need anymore. As working class American adults, we all have things we do not use that lay around. Most American homes are filled with things which are barely used year by year.
There are people in need of these things- SELL THEM.
Yes, you heard me right. Pack all those things and put them up for sale. You do not need to do a garage sale. Online places like Craigslist or OfferUp will take care of it for you.
When I was saving up for an apartment, I sold all my old game consoles and other valuable. It still pains me today, because those were classic game consoles worth a lot. My dear reader, I am talking Gameboy advance, Gameboy SP and Nintendo Gameboy!
But oh well, sacrifices had to be made to reach the goal. I was able to raise about $600 that went into my savings. When you search around your current abode, I am sure there are things you do not need anymore which may be useful to people online. Sell them and add the money to your savings.
5. Work On Your Credit To Save Money On Apartment Costs
A major factor determining the size of your apartment security deposit is your credit history. Apartments will always run a credit check on you before renting out to you. I talked more about this on What Credit Score Do You Need For An Apartment– episode 6 on my podcast. Walking in with a good credit history and score increase your chances of getting a low security deposit.
Trust me when I say security deposit can be as big as $1000. It gets worse, when you have a bad credit history or history of not making rent. Oh yes- apartment complexes surely love a big security deposit to ensure you will not mess up their income flow.
So, be sure to work on your credit score and history while you save for an apartment. Besides qualifying you for some discounts, it ensures you do not dig into the money you have saved for unforeseen circumstances. Trust me, you will need the savings when you have a place of your own.
6. Use Apartment Locator Services to Cut Costs
While budgeting for apartment rent, remember there are other expenses associated with having an apartment. This includes moving costs, down payment, renter’s insurance and utilities. Do you know who could reduce these for you?
An apartment locator service.
I used one during my first apartment search. Not only did they get me an apartment who ran a no-rent first month, but also the apartment accepted a cheap renter’s insurance called Lemonade. This is after the other apartments I went to, said no to Lemonade when I asked them about its acceptance.
Also, an apartment locator service can negotiate to have you down payment and lease rate low. Or, find your an apartment that meets the financial goal you are going for. In my city, apartment locator service is free of charge. You can google to see whether your city has some.
How would this help you save?
It may help you save on move in costs, reduce your renter’s insurance, down payment or rent. You will not have to dig into your savings to make up for additional apartment costs. I recommend using apartment locator service towards your last month of saving goal and timeline.
On the whole, it boils down to creating a solid budget that will free up money for you to save. Without a good budget, you may struggle to save. God knows I struggled when I did mine years ago. This is because some apartments have some hidden fees when renting an apartment, which are not disclosed prior to signing a lease.
But, you do not have to struggle. Just follow what I said here and add your own ingenuity because you know your circumstances more than I do. You are going to be alright.
I am always rooting for your success. If you successfully hit your apartment savings goal, tag me on social media. Your story will inspire your fellow working class adults and me!
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