Living on Your Own

As you prepare to move out on your own, you may be asking yourself "Should I rent or should I buy?." The answer isn't always the same for everyone as there are many aspects to consider.

Buying
Buying a home brings both advantages and disadvantages to consider. On one hand you get to have a house, which is an asset and will build equity. Owning your own home also allows you to control the design and look of your house as well as provides a sense of stability. Being a homeowner usually means you plan on staying in that spot for years to come.
On the other hand you have to keep in mind that owning your own home comes with a lot of costs. You will be responsible for items such as maintenance and repairs, property taxes, homeowner's insurance, water and sewer services, and other items that you likely won't have to pay if you were to rent.

Renting
The nice aspect of renting is that you know the cost of your housing each month. You're not responsible for the maintenance or repair bills, so you don't have to plan on saving for these expenses. You also have the flexibility to move when you need to without penalty when your lease is up.
Renting has its own disadvantages, however. For instance, you likely won't be able to control how the rental looks, like paint. You also may experience rent increases at the end of your lease, which may make you need to move or just spend more money in general. You also may be forced to move or pay more in rent in the event that your landlord winds up selling the building.

Living on your own is no small task, and it takes a lot of consideration and preparation. Whether you are thinking about buying or renting, one of the biggest aspects to consider is your income. You need to make sure that you have a stable source of income. Most landlords and lenders will want to see proof that you have held a job long-term and that you have the capability to pay your rent or mortgage. Your income will also determine how much you can afford to pay each month. As a general rule of thumb, you should never spend more than 30% of your monthly gross income on housing.

Before moving out, you will want to start learning how to build a budget. Add up your monthly expenses that you have, like your phone bill, car insurance, car payment, etc. and subtract them from your total monthly income. It is recommended to use your net income, which is your income after taxes, than your gross income. Whatever is left over is what you would have left to spend money on food, activities, and any wants you have. While building your budget, it may also be a good idea to start trying to set aside the money you would be spending on rent in a savings account. This will help you get into the habit of paying this expense each month. Learning how to budget is a life-long tool that will help you stay on track throughout your life.

One of the best habits to get into is learning how to save money. Even if you are only able to set aside a small amount each paycheck, like $5, learning to save money and building an emergency fund is going to help you avoid going into debt when a big expense comes up. Whether that is repairs on your vehicle, money for moving, or needing to buy new clothes, having an emergency fund is a must-have when moving out on your own.

Rental Fees and Deposits
When moving into a new apartment, you typically have to pay a security deposit, and sometimes first and last month's rent. Usually the security deposit is one month's rent, so this may mean that you need to have a total of up to three months' rent to give your landlord before moving in. There are also sometimes other fees, such as a pet deposit or a rental application fee that you may need to come up with.

Furnishings
Buying furniture for your new place can be expensive. Even when getting furniture second hand, you can expect to have to pay hundreds or thousands of dollars. It is important to remember that you don't need a fully furnished apartment right out of the gate. Focus on what you plan on needing the most, like a bed, couch, dresser, etc. Keep in mind that you can also save up to upgrade your furniture later.

Moving Expenses
While you may be able to grab some family and friends to help you move, chances are you will still likely need to rent a vehicle to move all your stuff. Combine that with purchasing boxes or totes to pack up all of your stuff, you could be looking at spending a minimum of a couple hundred dollars just to move. You can expect to pay even more if you hire a team of movers.

Miscellaneous Expenses
While not as major, there are other expenses you may not have thought about that you will have to pay for when you move. These include items such as getting your license updated, cleaning supplies, and stocking the fridge and pantry. While each one may not cost that much, they can add up quickly, and you should make sure to save a little extra for moving so that you can cover these costs.