In reality, buying a home isn’t good for everyone and paying rent isn’t always a waste of money. Along with financial reasons, always consider your social and professional situation as well. For example, you just started a new job, are moving to a new city, or simply have not yet laid out a long-term plan.
In general, assets appreciate, but one should never buy one’s first home. Significant financial benefits, include less debt and faster homeownership. However, renting your first home can be confusing and overwhelming. From the basic to household expenses, here’s your apartment checklist.
1) The basic
Start with estimating the rent you can afford. Never spend more than 30% of your income on rent because you should always consider unexpected emergencies. Come up with a hypothetical rent budget by looking at average rent prices. Think about the following checklist:
- Why are you moving?
- How much rent can you afford?
- What’s the minimum apartment size that you can live in, based on affordability?
- What are your financial goals, from near-term to distant?
- How important are location and safety?
2) Down payment/security deposit
Regulations vary from country to country, but in general, your future landlord will look at your employment status and past income. Before signing the lease, always ask the landlord:
- How much you have to pay in advance?
- What happens to your down payment, is it being invested into the building?
- What happens to the money when you move out?
- Is there an option to buy the apartment after renting it for x years?
3) Furniture and utilities
Now that you have an idea of the approximate rent, the next step is to budget how much you can spend for big-ticket items like kitchen, bed, couch, fridge, washing machine. During your purchase, always think from a long-term perspective.
- Given your current situation, what is more critical, price or quality?
- What furniture is mobile should you move again?
4) Household expenses
Especially at the beginning, it is difficult to estimate your household expenses, considering it’s your first apartment. The first 3 months will give you a good feeling of your real electric bill, gas charges, insurance expenses, and food budget. Keep in mind that real-life always has a way of getting in the way. When running your own household, you will also face unexpected expenses, but the good thing is that you can prepare for them. MW Tip find out here how you can prepare for an emergency fund.
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