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moving out with 20,000

Is $20k Enough To Move Out?

$20,000 is a lot of money that takes discipline and time to save up. If you have done it, be proud of yourself! But, is $20K enough to move out?

Yes, $20,000 is enough to move out. It will cover the security deposit, several months of rent, and expenses. It will keep you floating while looking for a stable source of income.

Now, this topic is nuanced, and it depends on several factors. In some cases, $2,000 is enough to move out. For others, $2,000 is less than the monthly rent! So, let’s dig a little deeper into it, and figure out if $20,000 is enough for you:

Yes, $20,000 is Enough To Move Out:

It is key to have a safety net when moving out. $20,000 is a great cushion, and will likely keep you floating through the initial months when you look for a stable source of income. In fact, $20K can probably carry you for up something like 6-8 months if you’re disciplined.

Personally, I had $1,000 when I moved out. This was NOT enough. I lived on the “ramen” diet for weeks, which sucked. Luckily, I landed a job quickly and managed to survive.

That’s the key to moving out – finding a decent job. What you have saved up is just to get you going, or in case something bad happens.

You see, the most important thing to get in place when you move out is to have more money coming in than money going out.

As soon as you make more money than you spend, how much you have in savings is technically speaking not that relevant anymore.

Of course, you should always have a filled-up savings account just in case, especially in times like these. However, what you make is more important than what you have, at least in the initial stages of life.

If your savings account is filled up with $20K, and you manage to land a job that makes more than you spend each month, you made it! You would, at that moment, be better off than most Americans. The median savings account is only $4,500. (source)

Before you move out, you must also create a budget. This way, you can prove to yourself that $20,000 is more than enough to move out.

Suggested reading: Is $5 000 Enough To Move Out?

Make a rough budget before moving out:

You should not spend months and months on this and make it super duper detailed. It just needs to be kind of correct, and overshoot your expenses a bit just to be sure.

This is how I personally did it when moving out. First, figure out what you’re likely to spend on the following:

  • Transportation – Are you able to ride a bike or walk? Or will you need/choose to drive a car? In that case, how much will the gas and insurance etc. cost?
  • Food – Will you be eating out? Are you going to host parties or barbeques or something? How much are groceries in the area you’re moving into?
  • Insurance – Are you going to buy stuff like life insurance? What about insurance on your belongings?
  • Clothes – How much do you spend on new clothes? Try to figure out the average monthly spending, even though you probably spend more some months and less others months.
  • Personal Care – Are you going to sign up for a gym? Do spend money on expensive products for your skin, hair, makeup, or exercise supplements?
  • Subscriptions – Do you have your own Netflix, Spotify or Disney subscription? If so, write it down!
  • Hobbies – Do you have hobbies you spend money on? For example, I play the guitar and spend money on new strings and other equipment, and should therefore include this in my budget.

There are other items/categories as well, but the ones above are the most significant in my opinion. At the end of the day, you’re the only one who knows what you’re spending money on, so feel free to add categories. Write them all down, and organize them in a table similar to one below:

ItemsExpense
Transportation$500
Food$300
Insurance$150
Clothes$100
Personal care$100
Subscriptions$50
Hobbies$100
Other Stuff$200
Total$1,500

I just put some random numbers into the right column, but you get the idea I’m trying to show you: Write down all the major expenses/items you can think of, calculate the monthly expense for each item, add it all up at the end.

Notice how “housing” (rent, utilities, and such) are NOT included in the budget?

Here’s why:

You should figure out how much your “living” expenses are FIRST, and then figure out how much you CAN spend on housing.

This way, you can get a more realistic and personal “rent budget”. This way, you ensure you don’t “over-rent” and can keep your head above water when you move out.

In addition, if you know that you’re going to spend $1,500 a month on “living”, and decide to rent an apartment for $800 (including utilities) a month with a deposit of $1,600 (usually twice the rent), you know that your $20,000 will last you ($20,000-$1,600) / $2,300 = Eight months.

The above equation is “Savings minus deposit, divided by monthly expenses including rent”.

Now you know that you must find a job within seven months and get that first paycheck within month eight. In addition, you know that whatever job you find needs to pay at least $2,300 – living expenses plus housing.

If you’ve never made a budget, or kept track of what you spend money on, here’s a table from The U.S. Bureau of Labor Statistics you can use as a helping hand. It shows the average spending of an American citizen:

ItemMonthly CostPercentage of Budget
Housing
(Rent or mortgage and utilities like electricity and water)
$178434.9%
Transportation
(Car payments, gas, bus tickets, vehicle insurance etc.)
$81916%
Food
(Groceries and restaurants)
$64012%
Insurance & Pensions
(Personal insurance like life insurance, pension savings etc.)
$60411.8%
Healthcare$4318.4%
Entertainment
(Subscriptions, TV, Speakers, a new Phone etc.)
$2434.7%
Apparel and Services$1202.3%
Education$1062.1%
Miscellaneous$761.5%
Personal care$541.1%

Read more about the different items over at The U.S. Bureau of Labor Statistics: https://www.bls.gov/cex/csxgloss.htm

With the budget done, prove to yourself that $20,000 is enough to move out:

Now that you’ve made your budget, you can finally answer the question and determine if $20,000 is enough to move out.

Ask yourself this:

With your current budget, can you find an apartment to rent and float on the $20,000 for at least three months? Remember to factor in the deposit!

With $20,000 you’ve probably got more than enough to float for three months. If you’re unsure on the three months, you can increase it to six months, just to be sure.

Suggested reading: Is $15,000 Enough To Move Out?

If you cannot find any potential places to live where you could survive for three months or more on $20,000, you need to save more money.

What To Do If $20,000 Isn’t Enough To Move Out:

You have a few options if $20,000 isn’t enough in your case. I’ll go through three of them, and explain why they solve the issue of a lack of savings:

Find a job BEFORE moving out:

The biggest obstacle between you and your new apartment is that you need to survive a few months without an income. In these months you’ll need to live off your savings. If $20,000 isn’t enough for get through the initial lack of income, you should find a job before moving out!

If you can find a job before moving out, the need for a additional savings disappears!

If you find a job before moving out, $20,000 will be more than enough to move out. If you’ve already landed the job, you’ll receive your first paycheck within a month, making the need for three/six months worth of savings unnecessary.

In fact, you technically only need one month’s worth of savings. This is risky though and should be done only when absolutely necessary.

Tighten your budget and find a cheaper place:

If your $20K nestegg isn’t enough, consider cutting your expenses.

Most people think about the “luxuries” like Netflix and Starbucks when cutting expenses, but I think that’s the wrong way to think about it.

The best way to cut down on spending is to START WITH THE BIG STUFF.

You’ll not cut your expenses significantly by canceling your Netflix subscription…

Small things make a small difference. Big things make a big difference.

Get a roomie – Share the rent!

This is a great way to cut down on expenses and make some new friends in the process.

You can check out websites like this one: https://roomiapp.com/ to find available places all over the United States to share the rent with people.

This way, you might be able to move out with $20,000 in savings without worrying about money at all.

Protip For Out-Movers With $20,000 Saved Up:

When moving out, you step into “the real world”. That’s when you have to take responsibility for your personal finances like budgeting, saving and investing.

The fact that you’re researching and reading this article is great. It tells me that you’re seriously thinking things through!

I moved out several years ago, and have learned a lot since I first took the step. I’ve also moved a bunch of times, and have tried all kinds of different lifestyles (in terms of monthly expenses and incomes).

I’ve tried living like a rat, spending less than $1,000 a month sleeping on a couch. I’ve also lived off $3,000 a month for a little while, feeling like a king. The most important lesson I’ve learned is the following…

I already mentioned it above, but it’s so important that I’ll do it again… If I could only teach you one thing, this would be it:

Small things make a small difference. Big things make a big difference.

What do I mean by that?

The three biggest expenses you will have are housing, transportation and food. These are the items you need to be careful about budgeting.

At the end of the day, the little things like your Netflix subscription or the occasional Starbucks coffee don’t really matter.

I write more about this in my article about saving money despite having to pay expensive bills.

I personally went from living paycheck to paycheck to being able to save almost 80% of my initial income every month by focusing on the big stuff like housing and transportation.

Here’s what I did:

I sold my car, moved into a smaller apartment closer to work and started this website to increase my income.

I could walk/bike to work in my new location, eliminating the transportation expense. The rent was also much cheaper. The website increased my income by roughly 40% in one year. Simple as that I turned my finances upside-down, and started saving 80% of my initial income (income before the website started earning money).

I went from “there’s too much month at the end of the money!” to securing my finances with a comfortable nest egg equivalent to 12 months of expenses.

You’re in a position to make this decision from the get-go. Skip all the financial struggle – move to a cheap apartment close to your job, or get a job close to a cheap apartment. Also, you might consider starting a side hustle, like a small online business. The additional income is awesome!

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