I will never forget the day I moved out of my parent’s house. I was eager and couldn’t wait to get out into the world. But I hadn’t saved nearly enough to move out yet!
With roughly $1,000 in my bank account and no secure job in sight, I was in a bad situation. I exclusively ate ramen because I was terrified of going broke. Luckily, I landed a job rather quickly and made it!
Today, I will tell you everything I learned from this mistake in hopes that you’ll avoid it. Here’s the short answer to your question:
Yes, $5,000 is enough to move out. You should find a place where $5,000 keeps you floating for at least three months, giving you enough time to find a stable source of income.
If you’re trying to figure out how much you need to move out, you should instead read this article: How Much To Save Before Moving Out: The Definitive Answer
Yes, $5,000 is Enough To Move Out:
It is key to have a safety net when moving out. $5,000 is a decent cushion, and will likely keep you floating through the initial weeks and months when you look for a stable source of income.
If you already have a job waiting for you, or if you can keep working on the job you already have now, what are you waiting for?
You see, the most important thing to get in place as soon as you move out is to make more money than you spend.
As soon as you make more money than you spend, how much you have in savings is technically speaking irrelevant.
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.
But know this: For one reason or another, we all inevitably need to dip into our savings. Having none might force you to move back to your parents.
In addition, before you move out, you should create a budget. This way, you can once and for all make sure that $5,000 is enough to move out.
Suggested reading: Is Saving $100 Per Month Good? (Worth it in the long run?)
Make a simple budget before moving out:
You don’t need to spend weeks on this and make it 100% correct. It just needs to be roughly correct, and conservative/realistic.
Here’s how I would go about it:
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 posts as well, but those are the most important in my experience. In the end, only you know what you spend money on, so feel free to add categories. Try to write down all the big ones, and write them in a table like the one below:
| Items | Expense |
|---|---|
| Transportation | $350 |
| Food | $200 |
| Insurance | $125 |
| Clothes | $50 |
| Personal care | $35 |
| Subscriptions | $25 |
| Hobbies | $50 |
| Other Stuff | $100 |
| Total | $935 |
The numbers in the table above are random, but you get the idea. You need to write a list of most of the things you’re going to spend money on, figure out how much you will spend on them, and sum it all up at the end.
Suggested reading: The 4 Steps To Save A Lot Of Money Fast
Notice how “housing” (rent, utilities, and such) are NOT included in the budget?
Here’s why:
You FIRST need to figure out how much you’re going to spend on “living”, 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 $1,000 a month on “living”, and decide to rent an apartment for $400 a month with a deposit of $800 (usually twice the rent), you know that your $5,000 will last you ($5,000-$800) / $1,400 = Three months.
The above equation is “Savings minus deposit, divided by monthly expenses including rent”.
Now you know that you must find a job within two months and receive that first paycheck within the third month. You also know that you need a job that pays $1,000 + the rent of $400, or whatever rent you decide to go for.
To get an idea of what’s possible to live on, you might want to read this article: Yes, You Can Live On $2,000 A Month! Here’s How & Where:
If you have no idea what you’ll spend money on, here’s a table from The U.S. Bureau of Labor Statistics you can use as “inspiration”. It shows how the average American spends their money:
| Item | Monthly Cost | Percentage of Budget |
|---|---|---|
| Housing (Rent or mortgage and utilities like electricity and water) | $1784 | 34.9% |
| Transportation (Car payments, gas, bus tickets, vehicle insurance etc.) | $819 | 16% |
| Food (Groceries and restaurants) | $640 | 12% |
| Insurance & Pensions (Personal insurance like life insurance, pension savings etc.) | $604 | 11.8% |
| Healthcare | $431 | 8.4% |
| Entertainment (Subscriptions, TV, Speakers, a new Phone etc.) | $243 | 4.7% |
| Apparel and Services | $120 | 2.3% |
| Education | $106 | 2.1% |
| Miscellaneous | $76 | 1.5% |
| Personal care | $54 | 1.1% |
You can read more about the different items over at The U.S. Bureau of Labor Statistics: https://www.bls.gov/cex/csxgloss.htm
Got your budget? Now figure out if $5,000 is enough:
Now that you’ve made your budget, you can finally answer the question and determine if $5,000 is enough to move out.
Ask yourself this:
With your current budget, can you find an apartment to rent and float on the $5,000 for at least three months? Remember to factor in the deposit!
If you cannot find any potential places to live where you could survive for three months or more on $5,000, you need to save more money.
Suggested reading:
What To Do If $5,000 Isn’t Enough To Move Out:
You have three options if $5,000 isn’t enough in your case. I’ll go through each of them, and explain why they solve the issue of a lack of savings:
Find a job BEFORE moving out:
The main issue about moving out is that there’ll usually be a couple of months without income. In these months you’ll need to live off your savings.
However, if you can find a job before moving out, the need for a huge savings account disappears!
If you find a job before moving out, $5,000 will definitely be enough to move out. If you’ve already got the job, you’ll receive your first paycheck within a month, making the need for three months worth of savings unnecessary.
To give you some perspective, having a job makes it possible for some people to move out with as little as $2,000.
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 savings aren’t enough, maybe you need to cut your expenses down.
The best way to cut down on spending is to START WITH THE BIG STUFF.
You’ll not significantly cut your expenses by canceling your Netflix subscription…
Small things make a small difference. Big things make a big difference.
If you’re going to move out on $5,000, try to get your monthly budget (including rent) under 1/3.6 (because of the security deposit) of that, which is $1,400. If the security deposit is larger, you’ll need to lower your budget by even more. Here’s how to calculate it:
$5,000 – security deposit = X. Your budget should be a maximum of 1/3 of X.
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 $5,000 in savings without exclusively eating nuts, ramen and hot dogs for the first few months.
Suggested reading: Is 20k Enough To Move Out?
Protip For Out-Movers With $5,000 Saved Up:
When moving out, you start your adult life. That’s when you really have to take responsibility for your personal finance.
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).
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 income every month by focusing on the big stuff like housing and transportation.
Here’s what I did:
I sold my car and moved into a smaller apartment closer to work.
I could walk/bike to work in my new location, eliminating the transportation expense. The rent was also much cheaper. Simple as that I turned my finances upside-down.
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.
Suggested reading:
