Moving out is a major milestone and should be well planned. It is one of the first big decisions you’ll make as an adult, and hopefully you’ve been saving up for it. I made the mistake of moving out with too little money, and I hope to help you avoid doing the same.
Today, I’m gonna help you figure out if $7K is enough for you to move out:
Yes, $7,000 is enough to move out. It will cover the security deposit, rent and expenses for a few months, and give you time to land a job.
Technically speaking, you do it with as little as $200. If you’re willing to live in a tent and eat nothing but hotdogs, you’ll probably be fine with almost nothing!
However, this is not an option for 99.9% of people, including you I assume. So, let’s get into the more nuanced and detailed discussion, and figure out if $7,000 really is enough to move out:
If you’re looking to figure out how much YOU need to save up before moving out, read this article: How Much To Save Before Moving Out: The Definitive Answer
For Most People, $7,000 is Enough To Move Out
It is key to have a safety net when moving out. $7,000 is a good cushion, which will keep your head above water in the initial stages of moving out.
But know this: $7,000 feels like a lot of money, but it can dissipate faster than you think!
If you’re considering moving out with $7,000 saved up, you shouldn’t wait too long before you find a stable source of income (a job). Ideally, you should have the job secured within the first two months. Remember, that it takes a month of working before you get your first paycheck.
To make more money than you spend should be priority numero uno as soon as you move out!
As soon as you make more money than you spend, how much you have in savings doesn’t really matter that much.
Of course, you should always have a filled-up savings account just in case, especially in times like these when inflation is making things more expensive every quarter. However, what you make is more important than what you have, at least in the initial stages of life.
But know this: Sooner or later, we all inevitably need to dip into our savings. Having little or nothing might leave you no choice but to move back to your parents. Or worse, land you on the streets.
You also need to set up a budget before moving out. This is the only way to determine once and for all if $7,000 is enough.
Suggested reading: Is $5,000 Enough To Move Out?
Make a budget before moving out:
You don’t need to spend 100 hours on this and make it perfect. It just needs to be more or less correct, and conservative/realistic. It’s a good idea to overshoot the expenses, just in case you forget something, which most of us usually do…
First, you need to figure out what you’ll spend on the following items:
- 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.
The items/categories above are the most important, but multiple others exist. At the end of the day, you’re the only person knowing how you spend your money, so feel free to add other items to the list, or change the existing ones.
Try to write them down, and place them in a table like the one below:
| Items | Expense |
|---|---|
| Transportation | $350 |
| Food | $235 |
| Insurance | $125 |
| Clothes | $50 |
| Personal care | $35 |
| Subscriptions | $30 |
| Hobbies | $75 |
| Other Stuff | $100 |
| Total | $1,000 |
The numbers in the table above are random, but you get the point. Write down a list of the different expenses you’ll have, estimate how much you’ll spend on them, and sum 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 you’ll spend on “living” FIRST, and then figure out how much you CAN spend on housing.
This way, you can get a more realistic estimation and perspective on your “rent budget”. Also, you ensure you don’t “over-rent” and end up with negative monthly cashflow (more money going out than coming in).
In addition, if you know that you’re going to spend $1,000 a month on “living”, and decide to rent an apartment for $800 (including utilities) a month with a security deposit of $1,600 (usually twice the rent), you know that your $7,000 will last you ($7,000-$1,600) / $1,800 = 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 the second month, and receive that first paycheck within the third month. You also know that you need a job that pays $1,000 + the rent of $800 = $1,800 per month.
Bein good for three months is a decent starting point. Anything less than three months is a high risk. I would save more in that case.
If you have no experience making budgets, or 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 $7,000 is enough:
Now that you’ve made your budget, you can finally determine if $7,000 is enough to move out.
Ask yourself this:
With your current budget, can you find an apartment to rent and survive on the $7,000 until I start earning money from a job? Remember to factor in the deposit!
If you cannot find any potential places to live where you could survive for at least three months on $7,000, you probably need to save more money.
If you can’t find a place to live for at least three months on $7,000, you can consider saving up $10,000. If you want to be totally secure, I think $15,000 is a superb buffer when moving out. But it’s up to you.
Personally, I had $1,000, and I struggled hard. I was on the infamous “ramen diet” for weeks. I also resorted to eating only peanuts for 5 days because I figured the cheap price and high calories were a great deal. I sucked, and really don’t recommend it.
Suggested reading: Is Saving $300 Per Month Good? (Where You’ll Be In The Future)
What To Do If $7,000 Isn’t Enough To Move Out:
You have a few options if $7,000 isn’t enough. I’ll go through three of them, and tell you how they solve the issue of a lack of savings:
Suggested reading: The 4 Steps To Save A Lot Of Money Fast
Solution #1: Find a job BEFORE moving out:
As mentioned earlier, when you move out there’ll most likely be a couple of months where you don’t have any money coming in. That’s the number one reason for saving up a bunch of money before making the move.
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, $7,000 is more than enough to move out. If you’ve already got the job, you’ll receive your first paycheck within a month, making several months worth of savings unnecessary.
Without a large enough safety net, however, you’re risking it. If something happens, like a medical issue, or an unexpected expense, you’re screwed. This is dangerous and should be done only when absolutely necessary.
Solution #2: 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 $7,000, try to get your monthly budget (including rent) under 1/3.6 (because of the security deposit) of that, which is roughly $1950. If the security deposit is larger (like three or four months), you’ll need to lower your budget even more. Here’s how to calculate it:
$7,000 – security deposit = X. Your budget should be a maximum of “X” divided by the number of months of expenses you want saved up. Three or more is advisable.
Solution #3: Get a roommate– 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 $7,000 in savings without exclusively eating nuts, ramen or hot dogs for the first month or two!
Suggested reading: Is 2k Enough To Move Out?
Protip For Out-Movers With $7,000 Saved Up:
When moving out, you step into adult life. That’s when you have to take responsibility for your personal finance.
The fact that you’re researching and reading this article is a good sign. 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 a few various lifestyles (in terms of monthly expenses and incomes).
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 you mean by that?”
The three biggest expenses most people 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. In addition, I created another source of income – this website.
I could walk/bike to work in my new location, eliminating the transportation expense. The rent was also much cheaper. The additional income was roughly 40% of my initial income. 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.
I’ll add a nice video/podcast about personal finances by “The Money Guy Show“. They have a great YouTube Channel with awesome content. Check it out:
Suggested reading: