How to Budget for Your Dream Apartment

If you’re on the hunt for a new apartment, you’ve probably pinned bar carts galore or roamed the aisles of Target for the chicest throw pillows. Along with decorating, you should also take time to budget. It is not the most thrilling part of the moving process, but it is essential for staying financially healthy.

I moved into my first apartment in Germany this month. After a month of searching I found the perfect place within my budget and in an ideal location. It required a lot of research before I was able to decide on the best apartment for my needs, but the budgeting process made me feel confident about signing my rental agreement. If you’re ready to begin your search, below you’ll find a comprehensive guide to budgeting for your dream apartment.

List Your Needs, Wants, and Dreams

Make a list of your needs, wants and dreams for an apartment. This will help you identify your living priorities so that you can focus on your real needs. If you’re working with a broker, you can send them this list so they know exactly what you’re looking for. I created my three lists in an Excel document in under 15 minutes.

Your needs should include everything you must have in an apartment to live comfortably. Your wants should be anything that you would love to have but are not essential. The needs and wants category can sometimes overlap, so try to keep your needs to the minimum. You’ll possibly find a place with one or more of your wants, but don’t expect to have all of your wants. Finally, your dreams should cover everything you desire in your perfect apartment, but you might not get if you’re on a tighter budget.

Below is the spreadsheet that I created during my apartment hunt. You can use my lists as an example, but your needs and wants might be different from mine depending on your location and lifestyle. If you need additional inspiration, you can find other apartment wishlists on Pinterest and other blogs.

Determine Your Budget

Creating a budget for your apartment can be a little tricky, especially if you’re a first-time renter. Here is a simple process to help you determine your budget:

• Determine your monthly income

• List your monthly expenses besides rent

• Subtract your expenses from your income, and that’s the amount you have to spend on your living expenses

Determining your monthly income is quite straightforward. Add up all income sources and financial support.

To figure out your monthly expenses, list all expenses into three categories: fixed expenses, variable expenses, and discretionary expenses.

Fixed Expenses: necessary costs that don't change in amount from month-to-month. Some common examples of fixed expenses include:

• Rent

• Insurance

• Phone plan

• Gym membership

Variable Expenses: necessary costs that change in amount from month-to-month. Some common examples of variable expenses include:

• Groceries

• Transportation

• Electricity

• Vehicle maintenance

Discretionary Expenses: nonessential costs or wants. Some common examples of discretionary expenses include:

• Entertainment

• Eating out

• Vacations

• Gifts

To determine your disposable income, add up expenses from all three categories and subtract them from your monthly income. This is the remaining amount that you have to spend on your living expenses.

You can also determine your apartment budget through the 50/20/30 rule. 50% of your income should be spent on needs, 30% on wants, and 20% on savings. You can use this principle to calculate your general budget and then determine an appropriate amount for rent. It is also a popular rule to spend no more than 30% of your income on housing. If you are on a tighter budget, you can also adapt this rule to 20-25% of your income. The key is to find a budgeting system that works for you.

Consider Additional Expenses

Living expenses don’t always include just rent. You’ll need to consider any deposits you might have to pay (security, pet, utility, etc.) and include them in your budget. If you meet the specific conditions, you should receive a refund, but it is a good idea to account for them anyways. If utilities such as gas, electric, and water are not included in the rent, you should factor them into your apartment budget as well as other costs. Some other common living expenses include:

• Internet

• Pest control

• Pet fees

• Pest control

• Parking

• Storage

• Administration fees

If you want to stylishly organize your budget, check out my Apartment Budget Planner. Your dream apartment is on it’s way!