Do I Have Enough Money to Move out of my Parents' House?
Here's what to think about before you pack your bags.by Gretchen Brown
If your image of an adult still living at home with mom and dad is a George Costanza type, you’re a little off.
That’s because living with the 'rents is more common than you think. In 2015, a third of 18 to 34-year-olds lived at home with their parents, according to the U.S. Census Bureau.
So if you’re currently living with your parents — and looking to move out — figuring out when to take the plunge can be a big decision. Usually, the biggest consideration is budget.
Calculating the amount of money you’ll need to afford your own place isn’t as simple as it seems.
“In general, the three biggest categories for spending for all American households are housing, food and transportation,” financial planner Sarah Behr said. “Rent is easy to put your finger on, it’s a fixed cost, assuming you’ve identified where you’re going to live. The variable things like food and transportation can really eat away at your budget if you're not realistic.”
How much rent can you afford?
If you have a job, you’ll likely be limited to a specific area in your housing search, relatively near your place of work. But within that area, cost can vary wildly, depending on the age of the building or renovations, distance from a metropolitan center, neighborhood, number of bedrooms and number of roommates (if any).
“Around housing, there’s this idea that no more than 30 percent of your income should go towards your housing,” Behr said. “That’s kind of an antiquated number, given the housing prices of coastal areas.”
These were all things Maria Muellerleile, 25, considered when she decided to move out of her parents’ house last year.
She knew she wanted to live in a specific neighborhood, and didn’t want a roommate. That would inevitably bring her cost of living up. She spends about $950 a month.
“I spend a lot of my paycheck on rent (like 40 to 50 percent) but I don’t have a lot of other expenses so it works,” she said, adding, “I really wanted to feel safe in my apartment, and this one ticked all the boxes. I can afford it, I just live frugally.”
Another thing to keep in mind is that you don’t just need enough money for the first month’s rent to move to a new place. You’ll often need to pay last month’s too, as well as a security deposit.
You also might need to pay for movers.
“It’s common for people to focus on coming up with their first month of rent without realizing you actually need to have three months on hand,” financial advisor Megan Kiesel said.
How are you getting to work?
Aside from rent, many young folks forget to factor in transportation and parking costs.
A new place (might) mean a shorter commute to the office. But as opposed to your parents’ place, you might end up paying for parking twice, both at your place and where you work.
It’s important to add that in when you look at transportation costs (as well as insurance, gas and any car payment you might have).
Sometimes, cutting down the commute is worth paying rent.
Nick Inserra, 24, lived with his parents for just over a year after graduating from college. He knew that moving out could cut his commute by 45 minutes (as well as give him way more freedom).
“After crunching the numbers and realizing that I could save some gas money and sleep in more in the morning, I made the decision,” he said.
His new place is just 10 minutes from his office, and 15 minutes from a neighborhood he’s always at on the weekends. It’s a happy medium.
If you just graduated from college, there’s a good chance you’re not making any student loan payments right now (there’s usually a six-month grace period).
But if you have loans, you need to make sure to factor those in when you’re making your budget.
“Forbearance is not a plan,” Kiesel said. “It’s so important to get on top of your student loans early so that you won’t miss any opportunities for forgiveness. These loans are not going anywhere, so you may as well make a plan and have some peace now.”
You also might want to talk to your parents about what moving out means to them.
If they were covering costs like insurance while you lived with them, they might hand those costs over to you in your own place.
Think about health insurance, car insurance, and even your phone family plan.
“if it’s just you and you have a job that offers insurance, it’s wonderful,” Behr said. “But if it’s not included, you have to think about, for a healthy person, it’s probably $185 a month on a high deductible plan.”
Figure out what your job offers, and what prescription drugs and doctor’s visits will cost you out-of-pocket.
Do you have enough savings?
At bare minimum, you’ll need enough saved to pay for the rent and the security deposit. But what about past that?
“Any good financial advisor will tell you that you need three to nine months of living expenses in the bank,” Kiesel said. “The shortcut to figuring out your magic number is to look at your average take home pay for a month and multiply it by three or six.”
If you have a supportive family you could turn to in an emergency, Kiesel said, you might be able to get away with three. But if you’ll be on your own, six to nine months is better.
“The last thing you want to happen is to have to move back home again because of a lost job or other unforeseen circumstance,” she said.
If you’ve made all the calculations, and still feel like you’re falling short, don’t worry. You still have options.
Many young folks work a side hustle on the nights or weekends for the first few years out of college to make up for lower entry-level pay, waiting tables or freelancing.
There’s no shame in it, and it may help you move out sooner rather than later.
Eyes on the prize
Once you’ve moved out and are in your own place, don’t fret if the money seems tight at first.
Behr said there’s always some drag on your budget in a new place, before you’ve figured out the efficiencies.
“There’s going to be six months while you try to figure out the subway, and maybe you take the wrong one and you end up on the wrong side of town, and then you’ve gotta spend 30 bucks on an Uber to get to the other side of town,” she said.
Or maybe you go to Target to buy a few trash cans and towels, and before you know it you’ve spent $200. You’ll need to give yourself a little breathing room.
The most important thing is to have a budget in mind, and a vision for your spending, before you move out.
“Budget seems to be a word a lot of people associate with scarcity rather than abundance,” Behr said. “If you say, ‘I’m saving for this goal,’ or ‘I’m saving for this awesome new apartment,’ that doesn’t seem so much like deprivation.”