New to Renting: Creating an Apartment Living Budget
September 28, 2017
Author: Park Property Management
It's an exciting time when you get your first apartment and move out on your own!
As a new renter, there are some things to remember to do before you move in.
A very important one is: budgeting! It doesn't sound fun but preparing a proper budget will keep you organized and give you the peace of mind that you'll be able to make your payments on time and have funds for your day-to-day needs, plus the fun stuff!
Not sure how to get started? Park Property Management is here to help!
When creating a budget, finding a method you feel comfortable with is key. Common methods include a pencil and pad of paper, a database spreadsheet, online tools and smartphone apps.
Step 1: Determine your income & fixed expenses per month
If your pay cheque varies from month to month, always use the lowest amount for your budget. If you receive any monthly tax credits, be sure to include those as well.
Next, you will need to list all your expenses that will be the same each month. Be sure to include the following:
- Insurance: renters insurance, car insurance, life insurance
- Utilities: heat, hydro, water, cable, internet, cell phone, etc.
- Other fixed payables: Netflix, Sirius, Spotify, gym membership, loan payments, etc.
- Food: groceries & allotment for take-out (lunch, morning coffee, dinners out)
- Transportation: gas, parking, transit pass, transit tokens
- Pet care: pet food, pet insurance, etc.
Step 2: Allot your discretionary income
Once you've figured out how much money you have left over after the "must pay" items from Step 1, you can allot the leftover funds to:
- Entertainment: Going out to a movie, purchasing apps, going out to the bar, etc.
- Savings: Choose a $ amount to put into savings each month
- Investments: RRSPs, Stocks, High-Interest Savings Accounts, etc.
- Miscellaneous: Allotment for things like toiletries, clothing, gifts, etc.
- Vehicle maintenance: Savings for unexpected car repairs
To get an accurate account of what you are spending, it's a good idea to track each penny you spend for a couple of months. Doing this will show you where your money is going and give you an accurate account of all expenses and necessary purchases.
Step 3: Create your budget doc or enter the information in your budget app
Looking for an easy way to keep track of your budget? These apps make following a budget easier and work on all devices:
Goodbudget – This app uses an envelope system to track your spending.
Mint.com – Create budgets, pay bills, and track your spending by directly connecting to your bank account through the app, or download one of their budget template files to manage manually on your computer.
PocketGuard – Connecting directly to your bank account, PocketGuard helps you create a simple budget and find ways you can save money.
Step 4: Stick to your budget
Many times, a budget is made and then forgotten. As a first-time renter it's important to create good budgeting habits now, that will follow you into the future.
Sticking to your budget will help you avoid missed rent payments. Defaulting on a lease is very expensive and not in your best interest financially and personally. If the default makes its way to your credit score, it will affect you negatively in the future, not just with obtaining credit loans, but your ability to rent housing going forward.
If your job status changes part-way through your lease, speak to your landlord to discuss payment plans. It's best to communicate as clear and as soon as possible, if your ability to pay rent on-time is compromised. Your landlord will advise you on the best course of action.