How much should I set aside before moving?

Question

I recently moved out of my parents' house since I graduated college and have a fulltime job. Rent at my new place is roughly $1200/month plus utilities. I figured that $2.5k would be enough to start with, but that was quickly depleted, thanks to insurance, car payments, rent, security deposit, groceries, furniture, etc.

Maybe I'm over-generalizing this, but is there some sort of rough formula for how much should be set aside before moving? Apparently double a single month's rent was not enough for me.

Answer 1

Add up all of the expenses. For a rental, two to three months rent is typically needed to pay deposit, first and last month's rent. Then there's deposits and fees to have utilities activated and put in your name. Then you should budget for the kitchen: food, dishes, utensils, pots and pans, small appliances. Then the rest: linens, towels, cleaning supplies, bathroom supplies, etc. Oh. Don't forget furniture. At least a mattress and a small table with a chair. :)

Along the way, you'll find out how much your monthly expenses are, on average. Use this to calculate how much you need to keep set aside on a permanent basis as your emergency fund.

Answer 2

Its about planning. In your situation I would say $2.5K is approaching too much of a "set aside" or what some people would call an emergency fund. This money should only be used in emergencies.

In your case you used this fund for all kinds of things that were not emergencies. Car insurance, car payment, rent, security deposits, groceries, and furniture should have all been planned and therefore budgeted. The same sort of thing with car maintenance, utilities, clothing, and holiday gift giving. Plan for these items and you won't see your hard fought savings depleted.

The magical formula: Adding the anticipated expenses! You should probably look up some resources and guides to budgeting. Getting good at budgeting early will help you succeed in life.

You may want to call your parents and thank them for taking care of all these things for you while you were growing up.

Given that you recently graduated college I must assume you are somewhat success minded. If so why in the world would you have a car payment? Although the idiot box will tell you that you cannot be a person of significance without a brand new car, wealthy people will tell you different. I recommend reading two books: "The Millionaire Next Door" and "Stop Acting Rich" if you are remotely interested in becoming wealthy.