Living with your parents is often frowned upon in the U.S., but it can be a way to help you find your financial footing.
At some point, however, you or your parents will decide that it’s time for you to move on. If you’re considering moving out soon, it can’t hurt to start planning now for your new expenses. You’ll probably also want to set aside some cash in case you have unexpected costs or your finances take a turn for the worse.
Expenses to Consider Before Moving Out
If you currently have few or no expenses, moving out can be a rude awakening. Fortunately, your current situation likely allows you to save a lot more than if you were already living on your own.
To help you get an idea of what your expenses will be, here’s a list of some common expenses and how much you might expect to pay:
Rent prices can vary wildly depending on where you live. You can start by doing some research in your area to get an idea of what you’ll spend. Also, you can factor in whether you’ll be on your own or sharing a place with roommates.
Electricity, gas, water, and internet are all important utilities to have. Some of these costs can also vary depending on where you live and how many options from which you have to choose. It’ll also depend on whether you’re sharing their costs with roommates.
You may also be on your own for your phone bill. Some of the top wireless providers have unlimited plans starting at $50, but you can save if you’re able to stay on your parents’ family plan.
You’ll also want to consider what your costs will be for things like cable and streaming services. Cable costs continue to rise so one option for cutting back your expenses could be to become a cord cutter. Instead, you could opt-in to your favorite streaming service.
Renter’s insurance can help you to protect your belongings, and landlords might require it as part of your lease agreement. Monthly rates can vary based on where you live and how much coverage you want, but as of this writing the average cost is roughly $10-$20 per month depending upon the state in which you reside.
Other insurance plans you may be on the hook for include car insurance if you own a car, health insurance if you’re too old to remain on your parents’ plan (you typically have until you’re 26 years old), dental insurance, disability insurance, and life insurance.
Costs for these policies can vary based on several factors, and based on your situation, you may not even need some of them. If you get insurance through work, for example, the premiums will be taken out of your paycheck and won’t be included in your take-home pay. If not, you can get some quotes now to get an idea of what you’ll be paying.
If you’re making monthly payments on your student loans or a credit card, those payments will still be there once you move out. If you also have a car loan or medical bills, you’ll also want to make sure to add those to your budget.
It’s possible that you’ll be living paycheck to paycheck for a while, but it could still be possible to make it a goal to set aside some money for saving each month. How much you can save will depend on your goals and your budget, but even a dollar a day can really add up.
How much you spend on groceries each month is entirely up to you. You can save money by living on a ramen noodle diet, but you’ll likely feel better if you “splurge” on fruits, vegetables, and other whole foods.
Either way, you could expect to spend at least a couple hundred dollars a month on groceries and eating out.
Ready for a Better Banking Experience?
Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!
When you’re building a budget, it’s easy to forget necessities like toilet paper, toothpaste, shampoo, deodorant, and other toiletries. You may also want to have paper towels, laundry soap, and dishwasher detergent.
All of these expenses are relatively cheap on their own, but they can add up, and hygiene and clean dishes and clothes are essential.
The average American household spends roughly $134 on clothing (and related expenses like dry cleaning and repairs) each month. But if you’re on your own, you could likely get by on less than that, especially if you already have a full closet. That said, you may want to review your clothing purchases over the last few months to get an idea of how much you spend in the category.
It’s difficult to give every purchase a category, so it’s a good idea to have one where you can estimate random and unexpected expenses. Some costs, such as car maintenance and repairs or medical bills, don’t come up every month, and you may have some expenses that are unique to your situation.
Do your best to project how much you could spend on these expenses each month and see if you can make room in your budget for them.
How Much Do You Need to Save Before Moving Out?
If you’re wondering, “How much money should I save before moving out?” there’s no one-size-fits-all answer for everyone. Common wisdom suggests that you should have anywhere from three to six months worth of living expenses in an emergency fund. That way, you don’t have to worry about breaking your lease or defaulting on your debts if you lose your job or something else goes wrong.
To find out exactly how much you’ll need, you’d tally up how much you expect to spend on the categories above, then pare them back to your essential expenses. If you lose your job, for instance, Netflix and eating out won’t be as important as meeting your basic needs. Multiply those expenses by three to six, depending on what you’d want to have, then you can start saving from there.
When you move you’ll also incur a few one time expenses, like a security deposit on your new apartment. You probably need to factor in expenses like packing supplies, movers or a truck rental. Then, you’ll still have to furnish the space to your liking after you move in.
How to Save Money to Move Out
Once you have a solid estimate for how much money to save before moving out, you can more easily set a goal for when you want to make the leap. Then you can divide your savings goal by the number of months you have left.
For example, let’s say you want to move out in six months and need $12,000 in your savings account. You’d need to save $2,000 per month to achieve your goal.
That might sound like a lot of money, but if you earn enough and have zero necessary expenses right now, it’s can be easy to prioritize your savings. If it’s too much, though, consider adjusting your goal.
If you’re not clear about how you’re going to do it, you can start with taking a look at your current expenses and find areas where you can cut back. You may also want to look for ways to earn a little extra money here and there to put toward savings.
You know your situation and opportunities better than anyone else, so taking a hard look at your finances can help you do what it takes to reach your goal.
Getting Started with SoFi Checking and Savings
As you’re working to save enough money to move out of your parents’ house, it’s important that your money is safe and easy to access.
SoFi Checking and Savings® account is where you can spend, save, and earn all in one place
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC . SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet