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If you've made the decision to move to an apartment, congratulations. Whether it's your first apartment or you're simply changing locations, one of the things you will still have to deal with is paying rent, and that means you must have an apartment rental budget. Without an apartment rental budget there is no way of knowing what apartments you can and can't afford, so developing one is an absolute must before you begin your apartment search. Fortunately, making an apartment rental budget is not that difficult if you approach it systematically. Sticking to that budget may be more challenging, but you absolutely must do it if you are to find and keep an apartment you can afford.
Making an apartment rental budget is really just about making a budget. That is to say, your apartment rental allowance will come from your assessment of your total budget, which is an accounting of where your money comes from and how much money you bring in every month relative to the bills you have to pay and other financial obligations you have to meet every month. The gap between all your other non-rental expenses (including spending money, savings, and emergency fund) and your income (assuming your income is greater) is your apartment rental budget.
You'll begin your budget process by outlining your income and your expenses in a given month. If you have certain expenses that occur on a different time frame, you may want to divide or multiply them into monthly expenses for ease of calculation. Make these lists on separate pages, or separate sections on your computer spreadsheet. You can start with either list, but for simplicity's sake, let's say you begin with your monthly income.
For your monthly income you should only consider money that you can reasonably expect to receive every month. If you count on questionable sources of income, you will find yourself in a pinch when the time comes to pay the rent if one of those sources does not come in as planned. Income sources may include your take-home pay from any jobs you have, including any side work you do regularly, as well as interest from investments and any other income sources that you traditionally report on your tax return. Remember, you're only including money you actually expect to receive. Money that goes to social security or is vested in your retirement fund doesn't count.
When you are preparing your expense list in order to help determine your apartment rental budget, it may be a good idea to divide them into necessary and optional expenses. The necessary expenses are things you can't live without, like food, electricity, and gas. The optional expenses may be things like cable television, restaurants, or movies. These are things that may be important to you, but might be able to be sacrificed to some extent if you need to increase your apartment rental budget. If you're having trouble figuring out what your expenses are, look at your bank statements for the last few months and see what you consistently spent money on.
Common mandatory expenses can include insurance payments (car, renters, healthcare), utilities (electricity, phone, gas) and food (although this expense is flexible).
When you've totaled up all the expenses and subtracted them from the income, you will ideally have about 30 or 40 percent of your income left before figuring in rent. If not, that's okay. However, it means that you will have to either adjust your apartment rental budget or reduce some of your optional expenses. You should probably plan to allocate about 25 percent of your income to rent and have 10 percent for unexpected emergencies or additional savings. If you can budget fewer expenses, you can afford a more expensive apartment, although some may choose to still opt for a cheaper apartment and endeavor to save that money in case they someday wish to put a down payment on a home.
Once you have an idea of your apartment rental budget, you're on your way to finding your new apartment. An ideal way to proceed is by making use of an apartment finder website like Rent.com. These sites allow you to provide a location, apartment size and price range, and then they do the apartment hunting for you. Since you now know what your price range is, this process will be very easy. Once that's done, you should soon be presented with a list of affordable rental options. Narrow them down and visit the apartments you like the best. Don't feel obligated to spend the entire budget if you find a less expensive apartment that you like. You can always reallocate that money for other things.
Remember that when you first move in to your new apartment, you won't just be required to pay a month's rent. Most landlords require first month and a security deposit, and may even require the last month's rent as well. In addition, you may have to factor in moving costs and other expenses of moving to a new apartment. This means you will have to have considerably more money available to you when you move in than the amount you budgeted for rent. Don't be caught off guard by this when it's time to sign the lease. You may also wish to think about what will happen in the long term. If there is a standard increase of a few percent when the lease is renewed, you will need a complementary increase in income to maintain your budget. For most people this isn't a problem, but it may be something to keep in mind.
Also, be sure that you are honest about your budget. If you are buying things that you haven't really budgeted for, you may find yourself falling behind on your rent, which could create problems ranging from extra fees to the threat of eviction. You might also find yourself overextending with regard to credit. Remember, good budgeting is accurate budgeting. Finally, if your apartment rental budget just doesn't seem sufficient, consider getting a roommate. You may have to look for a slightly larger apartment, but you should still be able to save a considerable amount of money, especially if the roommate is sharing utility bills as well.