Article Summary

  • Moving out requires at least some additional funds.
  • Many landlords require the first month's rent and a security deposit.
  • Moving expenses include transportation and supplies to protect possessions.
  • A budget and emergency fund help ensure you have enough cash to move and stay in your new home. 
  • Sharing costs with a roommate and opening a high-yield savings account may help you get more for your money.

You're ready to live on your own. However, if it's your very first move, figuring out the cost of independence can be tough. And one of the first questions to ask is, "How much should I save before moving out?" Knowing the answer ahead of time may make it easier to pay necessary expenses and thrive in uncertain times. It can mean less stress once you make yourself at home in your new place.

Here's what you should know to create a reasonable savings and spending plan and put enough aside for moving expenses. 

Determining Your Moving-Out Budget

You'll have some one-time costs when getting a place of your own. These expenses only arise when moving but can be a significant chunk of the budget.

Rent and Security Deposits – What To Expect

Many landlords require the first month's rent payment and security deposit. While the details of security deposits vary, they are meant to protect the landlord against damages or unpaid bills. If the renter burns the carpet or leaves a hole in the wall, the landlord may refuse to return the deposit, using it instead to pay for repairs.

When using the phrase “first and last month’s rent,” the last month's rent acts as the security deposit. In some cases, it can even amount to more than one month.

Pets may require additional security deposits. For example, an apartment may allow dogs but require an extra initial pet deposit and a higher monthly rent amount.

Different Rules for Different Places

Each state has its own rules on rent and security deposits. Some states won't let landlords charge more than a month's rent for security, while others limit the total amount based on age or other factors. In Connecticut, for example, the landlord pays interest back to the renter for the security deposit.[1]

Estimating Moving Costs and One-Time Expenses

People without much furniture will need room and time to transport clothes, books, personal supplies, and food. Those who choose to go the do-it-yourself (DIY) route may need to factor in the costs of renting a small pickup truck or hauling a vehicle for the day. DIY may be cheaper than hiring an entire moving team, but it also requires some friends to help.

Other one-off moving expenses could include the fuel for the transport vehicle, moving insurance, and special tools like moving dollies and blankets to protect items, boxes, and packing materials.

How Much Money Should You Have Saved?

Many factors must be considered when determining a savings goal for your move. Not only are there moving costs to calculate, but your new place may also come with bigger utility bills or need some work. To determine how much you should save, consider the following:

Start with a Housing Budget

Before you can know what to save, figure out what you need to live each month. Living expenses vary greatly, but housing costs make up much of that. In fact, 50% of renters spend more than 30% of their income on housing. Meanwhile, 21% of homeowners spend over 30%.[2]

It's very important to know how housing fits into your monthly budget and what you can do to keep expenses from getting out of control. By listing expenses and income and honestly comparing them, you may identify opportunities to reduce spending to create a realistic budget.

Use the 50/30/20 Rule of Money as a Guideline

Allocate how each dollar will be spent before moving out. There’s no one-size-fits-all rule for how much money to spend or save, but a common formula looks like this:

  1. Put 50% of take-home pay toward necessary living expenses, such as rent, utility bills, debt payments, car loans, and medical expenses. If you're having trouble making a budget work, consider having more roommates or choosing a more affordable area to help defray some costs.
  2. Set 30% aside for discretionary spending, such as gifts for friends, dinners out, or non-essential opportunities throughout the month. 
  3. Deposit 20% into a savings account or other safe place to be used for short-term or long-term goals (like a wedding or future house down payment). Saving 20% may seem like a relatively small amount, but it can build over time with compound interest.

Can there be variations in this formula? Of course. After living in a new place for some time, understanding the patterns in your monthly expenses becomes easier. For example, the electricity bill may be lower in the winter, allowing you to put more toward savings. Or you may find a cheaper place to wash laundry or discover a grocery store with discounts on the items you buy most often. With small tweaks, it's possible to free up more cash for savings.

Calculate Three to Six Months of Living Expenses

The 50/30/20 rule helps guide spending throughout the month but doesn't help with large, unexpected expenses such as car repairs or an emergency room visit. That's where an emergency fund comes in handy. It’s designed as a safeguard for important but unplanned spending.

To know how much to put aside for an emergency fund, tally up all the expenses in the 70% bucket above and include a little cushion. For example, if you pay $2500 a month in living expenses to get by, add $100-300 for the month for a total of $2800. Then, take this number times three for a minimum emergency fund of $8400. For a six-month fund, you’d want to save at least $16,800.

By making an emergency fund a priority, you can rely on money to be there when the unexpected happens. in turn, this keeps you from pulling money from other areas, such as your groceries or rent. A high-yield savings account is one way to put this money away safely and even earn interest on the balance.

How To Save on Costs After the Move

Moving out can be an exciting time and an opportunity to create a new way of life. Once you get there, there are many ways to save on the moving process and living expenses, including the following:

  • Get a roommate to share rent, utilities, furniture, and kitchen supplies.
  • Carpool to work.
  • Plan for low-cost entertainment options.
  • Cook more meals at home.
  • Explore ways to save on energy, including programmable thermostats and eco-friendly window coverings.
  • Use all the amenities offered at your new home, including the free gym, pool, or pet park (if available).

Even if you choose to live alone, putting an emergency fund into a high-yield savings account can help build that fund faster. For information on how to open an account, speak to a PNC bank representative.