The Price of Freedom: How Much Do You Need to Save to Move Out?

As badly as you might want to move out of your parents’ house, you also don’t want to be living on the brink of financial collapse. Besides affording your monthly expenses, you should hopefully be able to build savings, pay down debt (if you have it), and have a little money left over for fun spending. Before moving out on your own for the first time, you’ll need to ask yourself if you’re ready to cover the following:

Regular monthly expenses

It’s pretty simple: Do you earn more than your expenses cost? If the answer is no, you can’t afford to move out. Create a monthly budget that accounts for rent, utilities, food, transportation, internet, cell phone, cable or streaming, and renter’s insurance. Don’t forget the ongoing expenses associated with being a functional human adult such as cleaning supplies, toiletries, laundry, and toilet paper. Try living on your proposed budget for a couple of months while you’re still at home. Set aside the money earmarked for the essentials in an emergency fund, which will provide a cushion for when you actually move out.

Credit score

Most landlords use credit checks to screen the financial trustworthiness of potential tenants. Your credit report details your entire borrowing history, including the number of late payments. A credit score is a numerical representation of your financial health, between 300 and 900. Excellent credit scores (760 or higher) will obviously look the best, and most landlords will want to see a credit score of at least 660 (considered “fair”). Before you start the apartment hunt, order your credit report and check your score to see where you stand and whether there are any errors. You can check, and track, your credit score and report for free through websites such as Borrowell and Credit Karma.

Paying off debt

Student loans can understandably take several years to pay off, and any debt repayment obligations should be factored into your budget. But moving out with a whack of credit card debt on your shoulders isn’t a good idea. If you’re carrying consumer debt but don’t pay rent or other expenses while living at home, you’re already living beyond your means – that won’t fly when you’re on your own. Make a plan to clear the balances before moving out, and refer back to your budget for how much spending money you’ll have after the bills are paid. If the margins are too slim, you might not be able to afford to move out just yet.

Emergency fund

An emergency fund is a savings account that acts as a buffer against any unforeseen and expensive issues like job loss, an emergency trip to the vet, or car repair. Before you move out, you should absolutely have an emergency fund in place. This doesn’t necessarily mean saving up the three to six months of living expenses often suggested by experts, but at least $1,000 to $2,000 to cover any disasters during the first few months of living on your own. When you move out, try to squeeze contributions to your emergency fund out of your budget – even if money is tight and it’s just $20 at a time.

A good idea is to keep your emergency fund in a high interest savings account. That way, your balance is protected and you will earn some interest.