Moving out for the first time can seem like a scary and even a somewhat daunting task.
But in reality, this is only the case if you fail to prepare properly and don’t have what people call a “financial cushion”.
To be honest, there’s no real secret to moving out of your parents house, but one thing you’ll want to make sure of is that your finances are in order.
$10,000 can be sufficient to move out and rent, but it’s essential to consider factors such as stable income, monthly expenses, and any outstanding debts or financial responsibilities before deciding. Careful budgeting and planning will ensure you have enough money to cover moving out.
So before renting a property, I recommend you factor in these expenses and see if you’re able to comfortably afford them on a monthly basis.
If so, you should be in the clear!
Witt that said, while moving out on your own should be a fairly simple thing, there are a few other factors you might want to think about.
For the rest of this article we’ll be discussing the best tips I would give any individual who is wanting to move out on their own for the first time.
5 Things to Consider Before Moving Out With $10,000
As the old saying goes, failing to prepare is preparing you to fail. And we don’t want that!
But that’s the reality if you don’t financially set yourself up for success when you move, things can go downhill quickly!
The last thing you want is to move out of your parents house, and then a few months later, move back in, trust me – it happened to me and you’ll want to make sure to avoid it at all costs.
Not only does moving suck, but moving back in with your parents can sometimes give your pride a knock.
So, without further ado. Let’s get into this.
1. Monthly Expenses
Single-handedly the most important factor to consider before moving out into a property is your monthly expenses.
Here you’ll need to work out your monthly income and your monthly expenses (such as electric, water, heating, car and food bills). As you’re moving out, you want to calculate if you can afford the property you want to move into by yourself (Or with a partner, if you’re moving out with them).
Create a “spending plan” and include everything you’d typically spend on a month-to-month basis.
Consider writing down every single one of your expenses, including travel, entertainment, and monthly retirement savings. It’s something that people moving into their first property fail to do but it can save you a huge number of headaches and frustrations down the line.
If you’ve written down all of your expenses and created a “spending plan” based on the property you want to rent and you haven’t got enough stable income to cover it, then take a look at what your expenses are and see if you’re able to cut back on anything.
Or better yet, look for a cheaper place to rent.
For example, paying off any debts that you owe before moving out such as a car or credit card payments can dramatically reduce your monthly expenses and may allow you to afford a place that you prefer more.
So if you’re looking to move out with $10,000, I’d first recommend reducing those monthly expenses as much as possible.
Related Financial Geek Article: 11 Quick Tips for Spending Your Money More Wisely
2. Current Debts
While I briefly mentioned this in the previous section, I think it’s a great topic to dive a little deeper into.
Most landlords require some sort of insight into your financial situation to determine whether you’ll be a good tenant for them or not. They do this for a sense of security and to make sure that you’ll be able to pay the rent each month.
Normally they’ll look at a debt-to-income ratio. Which in simple terms, measures the amount of money you owe each month as credit, over how much income you generate every month. To be considered fit-to-purchase by most landlords they expect to see a ratio of around 36%. Meaning that your debts shouldn’t exceed 36% of your income.
To be completely honest, this is a pretty generous ratio. So if your debts surpass this recommended percentage, then I recommend paying them down before moving out.
Structure a plan on how and when you are going to pay them off and work towards that goal until you hit your desired debt-to-income ratio.
Moving out is great, but a lot of the time you’ll be renting a house that requires furnishing.
Although it’s possible to bypass this by renting a place that’s fully furnished, the majority of the time this won’t be the case.
As you’ll be moving out for the first time, I can’t stress enough the importance of buying stuff second hand. Buying everything brand new can cost you well over $10,000 and it’s just not necessary.
Common second hand marketplaces include Craigslist, Ebay, Kijiji and Facebook Marketplace – take advantage of these platforms!
It’s really not that hard to find great deals on barely used furniture, if people don’t need it anymore, they just want it gone and they’ll often sell it for a heavy discount.
You don’t have to live with this furniture forever, and who cares that it’s second hand? No one expects you to have all brand new furniture for your first rental.
Related Financial Geek Article: 18 (Uncomplicated) Smart Money Moves for Your 20s
4. Renter’s Insurance
I’d also recommend budgeting a renter’s insurance fee into your spending plan when you decide to move out.
If you aren’t a natural budgeter, here’s an article I wrote that talks about my 8 favourite budgeting tips.
Like most types of insurance, it’s never needed until it’s needed. So while it may feel like a waste of money, if anything does happen to your rental you’ll be happy you have it.
Typically, renter’s insurance will cover situations like natural damages, fire, theft and even liability coverage if someone is injured on the premises.
Depending on where you live, renter’s insurance is usually around $20 a month from my own experience. It’s pretty affordable and it’ll give you that added peace of mind if you’re ever in an unfortunate situation regarding your home or the belongings within it.
Of course, there are premium insurers out there that cover you on a more extensive level, but most renter’s insurance that are around $20 a month should protect you enough as a first-time renter.
5. Credit Score
Something many first time home-owners and renters fail to do is protect their credit score which can often cause problems down the road.
To avoid this, you need to follow a spending plan. I know I’ve mentioned this a few times throughout this article, but if you’re not prepared to correctly manage your money and develop good financial habits, then your savings and credit scores are going to rapidly decline.
So make sure to pay your bills on time and only move into a place you can truly afford.
Related Article: Is Having Unused Credit Cards Bad?
So moving out for the first time entails some much-needed planning to guarantee you’ll be able to support yourself and live comfortably.
But even with everything discussed throughout this article, I still stand by the fact that $10,000 is enough money to move out with.
But it’s also super important to have a solid financial plan in place before pulling the trigger on anything.
Make sure your expenses can easily be covered by your income and listen to your gut, If something doesn’t feel right, it probably isn’t.
So pay off any small debts you might have, top up your emergency fund, have that $10,000 ready and move out!
Enjoy the next chapter of your life!