Renting an apartment requires careful financial planning. Follow along as we share the steps to budgeting for an apartment. With this knowledge you’ll be able to set a good financial foundation and plan for a sustainable future!
calculate your monthly income
Understanding your monthly income is a fundamental aspect of managing your finances effectively. By accurately calculating your income, you can create a realistic budget, set financial goals, and make informed decisions about your spending and saving habits.
Gather your income sources
- Wages and salaries: If you are employed, your primary source of income is likely your wages or salary. Gather pay stubs or review your bank statements to determine your average monthly earnings. If you are self-employed, use your bank statements and determine your monthly deposits.
- Additional income: You may also receive income from other sources, such as freelance work, side gigs, rental properties, investments, or government benefits. Collect documentation or records of any additional income you receive regularly.
Calculate your gross income
Once you’ve gathered information about your income sources, add up the total amount of money you receive before taxes and deductions. This total represents your gross income for the month. For example, if you earn $3,000 per month from your job and $500 per month from freelance work, your total gross income would be $3,500 per month.
Deduct taxes and withholdings
Next, subtract any taxes and withholdings from your gross income to determine your net income—the amount of money you take home after taxes.
Review your pay stubs or tax documents (click here for Connecticut) to determine the total amount of taxes withheld from your income each month. This may include federal income tax, state income tax, Social Security tax, Medicare tax, and any other applicable deductions.
Consider pre-tax deductions and contributions
Some expenses, such as retirement contributions, health insurance premiums, commuter benefits, and flexible spending account (FSA) contributions, may be deducted from your income before taxes are calculated. These deductions can reduce your taxable income and increase your take-home pay. If you have pre-tax deductions or contributions, add them back to your net income to calculate your total monthly income before deductions.
Account for irregular income
If you receive irregular income, such as bonuses, commissions, or seasonal earnings, it’s essential to account for these fluctuations when calculating your monthly income. Consider averaging your earnings over several months to get a more accurate picture of your monthly income.
By determining your income sources, deducting taxes and withholdings, considering pre-tax deductions, accounting for irregular income, and reviewing your budget regularly, you can gain a clear understanding of your financial situation and make informed decisions to achieve your financial goals.
Calculate your monthly expenses
Giving yourself a clear picture of your ongoing expenses is critical. Here’s a breakdown of common essential living expenses to consider:
Rent
Obviously! This is typically the largest expense and should be prioritized in your budget. Have a clear understanding of your base rent and all the additional expenses per your lease contract. Here are average rents in Lower Fairfield County – data sourced from Apartments.com (March 2024). Click the city/town to get an in-depth overview.
| Fairfield | Stamford | Norwalk | Bridgeport | Greenwich | Trumbull | Westport | Darien | Wilton |
| Studio: $1,684 | Studio: $2,014 | Studio: $1,941 | Studio: $1,196 | Studio: $2,078 | Studio: N/A | Studio: $2,322 | Studio: $2,219 | Studio: N/A |
| 1B: $2,745 | 1B: $2,570 | 1B: $2,267 | 1B: $1,369 | 1B: $3,226 | 1B: $2,387 | 1B: $2,421 | 1B: $2,677 | 1B: $2,063 |
| 2B: $4,562 | 2B: $3,424 | 2B: $2,952 | 2B: $1,625 | 2B: $4,755 | 2B: $3,010 | 2B: $4,970 | 2B: $3,918 | 2B: $3,688 |
| 3B: N/A | 3B: $3,968 | 3B: $3,568 | 3B: Insufficient Data | 3B: $5,528 | 3B: $3,100 | 3B: N/A | 3B: $6,431 | 3B: $5,081 |
Utilities
Factor in the cost of utilities such as gas, electricity, water, and sewer. These expenses can vary depending on usage and the season, so it’s essential to budget accordingly and anticipate any fluctuations.
Below are average monthly apartment utility costs in the State of Connecticut – research conducted by RentCafe. *This data is comprised of July 2023 averages*
Electricity – $208/mo.
Keep in mind that these monthly costs are averages! Additionally, your electric bill is highly dependent on the number of people living in the apartment, the size of the apartment, how mindful you are with your electricity consumption, and the number of appliances using electricity.
Gas – $139/mo.
Again, these monthly costs are averages! Most rental properties use gas for heat and the stovetop. Therefore, your consumption is the largest controllable factor in the cost. Do consider the actual efficiency of your unit’s gas fueled appliances and how that could impact the cost.
Water – $41/mo. & Sewer $44/mo.
These utilities are typically individually metered by unit. However, there are complexes that have a master meter. Think about the appliances that use water – such as your sink, dishwasher, toilet, laundry machine, and shower.
Renters insurance
Protecting your belongings with renters insurance is essential. Calculate the monthly premium based on your coverage needs and shop around for the best rates. Renters insurance provides coverage for personal belongings, liability protection, and additional living expenses in case of a covered loss.
The average cost of renters insurance in Connecticut can vary based on factors including the location within the state, coverage amount, deductible, and the insurance company’s pricing policies. However, here’s a general estimate:
- In Connecticut, renters insurance typically ranges from $15 to $40 per month.
- Annually, this could amount to approximately $180 to $480 per year.
These figures are rough estimates and actual costs may differ based on individual circumstances and insurance providers. To get the most accurate pricing for renters insurance in Connecticut, it’s best to request quotes from multiple insurance companies and compare their offerings. Additionally, factors such as the amount of coverage required and any additional endorsements or riders can affect the overall cost.
Health insurance
Include the cost of health insurance premiums in your budget. If you’re covered through an employer, this expense may be deducted from your paycheck. Otherwise, you’ll need to budget for monthly premiums if you’re purchasing health insurance independently.
Food and groceries
Budget for groceries and dining out expenses. Determine an appropriate amount based on your eating habits, dietary preferences, and any food-related costs such as meal delivery services or dining out with friends. Below is a rough estimate of the average monthly cost for food and groceries in Connecticut:
- Single individual: For a single individual, the average monthly cost for food and groceries might range from $200 to $400 or more, depending on their eating habits and whether they cook at home or eat out frequently.
- Family: For a family of four, the average monthly cost for food and groceries could range from $500 to $1,000 or more, again depending on factors such as dietary preferences, meal planning, and shopping habits.
It’s important to note that these figures are just estimates, and actual costs can vary widely based on individual circumstances. Additionally, dining out expenses would typically be separate from these estimates.
Transportation
Calculate transportation costs, including fuel, public transportation fares, parking fees, and vehicle maintenance expenses. Consider your commuting distance, transportation options, and frequency of travel when budgeting for transportation expenses.
Internet and Cable
Factor in the cost of internet service and cable or streaming subscriptions if desired. Compare prices and packages from different providers to find the best value for your needs.
The average cost for internet service in Connecticut, as in any location, can vary depending on factors such as the internet service provider (ISP), the type of connection (DSL, cable, fiber-optic), the speed of the connection, and any promotional offers or bundled services. However, to provide you with a general idea:
- Basic internet plans: For basic internet plans with speeds ranging from 25 Mbps to 100 Mbps, the average monthly cost in Connecticut might range from $30 to $60.
- Mid-tier internet plans: For mid-tier internet plans with speeds ranging from 100 Mbps to 300 Mbps, the average monthly cost could range from $50 to $80.
- High-speed or fiber-optic internet plans: For high-speed or fiber-optic internet plans with speeds exceeding 300 Mbps, the average monthly cost might range from $70 to $100 or more.
Keep in mind that these estimates are rough averages, and actual costs can vary based on factors such as promotional pricing, contract terms, and additional fees such as equipment rental fees or installation charges. Additionally, some ISPs offer bundled packages that include internet, TV, and phone services, which can affect the overall cost. To get the most accurate pricing for internet service in Connecticut, allocate time to research and compare plans from different ISPs in your area.
The cost of cable TV service in Connecticut, similar to internet service, can vary depending on factors such as the service provider, the package chosen, any promotional offers, and additional fees. Here’s a general overview:
- Basic cable: This package typically includes a limited number of channels, primarily local broadcast networks and public access channels. The average monthly cost for basic cable TV service in Connecticut might range from $20 to $50.
- Standard cable: Standard cable TV packages offer a more extensive selection of channels, including popular cable networks such as ESPN, CNN, HGTV, and others. The average monthly cost for standard cable TV service in Connecticut could range from $50 to $100.
- Premium cable: A premium package includes additional channels such as premium movie channels (e.g., HBO, Showtime, Starz) and specialty networks. The average monthly cost for premium cable TV service in Connecticut might range from $100 to $200 or more, depending on the number of premium channels included.
To get the most accurate pricing for cable TV service in Connecticut, it’s advised to research and compare plans from different providers in your area. It’s highly recommended to reach out to the property manager to inquire about the specific cable and internet infrastructure in place within the apartment.
Cell phone
Include the cost of your cell phone plan in your budget. This may include monthly service fees, data usage charges, and device payments if applicable. Cell phone bills can vary from state to state for reasons such as: tax rates on wireless services, coverage and network quality, telecommunication service fees.
The average cell phone bill in Connecticut, as in any location, can vary depending on factors such as the wireless carrier, the type of plan chosen, the number of lines on the account, and any additional services or features included. However, to provide an estimate:
- Individual plans: For an individual cell phone plan with one line, the average monthly cost in Connecticut might range from $50 to $100 or more, depending on the carrier and the amount of data, talk, and text included in the plan.
- Family plans: For family cell phone plans with multiple lines, the average monthly cost per line could be lower, typically ranging from $30 to $70 per line, depending on the carrier and the shared data, talk, and text allowances.
These estimates include the cost of the wireless service itself but do not include the cost of purchasing a new phone or any additional fees and taxes that may be associated with the plan. Additionally, the average cell phone bill can vary widely based on individual usage patterns, such as data consumption and international calling.
Other additional expenses
Don’t forget about various living expenses such as clothing, personal care items, entertainment, gym memberships, personal debt, loans, and subscriptions. These expenses may vary from month to month but should be accounted for in your budget!
Once you’ve identified all of your monthly expenses, add them together to calculate your total monthly costs. Regularly review and update your budget to account for any changes in income or expenses.
Budgeting methods
What works best for you? We have two methods for you to try: Zero-sum budgeting and the 50-30-20 budgeting method. These are two different approaches to managing personal finances, but they differ in their principles and implementation.
Zero-sum budgeting mandates allocating every dollar of income towards specific expenses or savings goals to ensure that total spending equals total income. In contrast, the 50-30-20 budgeting method simplifies budgeting by dividing after-tax income into three broad categories: 50% for necessities, 30% for discretionary spending, and 20% for savings and debt repayment. While zero-sum budgeting offers a granular approach, meticulously assigning funds to various purposes, the 50-30-20 method provides a more broad framework, making it easier to follow for some.
Zero-sum budgeting method
Zero-sum budgeting is a method of budgeting where every dollar earned is allocated to a specific purpose, leaving no money unassigned or “leftover.” The overarching principle is that income minus expenses should equal zero. In other words, the total of all expenses (including savings and investments) should equal the total income.
Zero-sum budgeting fosters conscious spending, financial discipline, and intentional allocation of funds toward priorities such as savings and debt reduction. It helps individuals or households ensure that they are living within their means and making progress towards their financial goals.
Let’s consider a real-life example of zero-sum budgeting for apartment living: James, a recent college graduate, has just moved into his first apartment. He earns a monthly net income of $3,000 from his job. Using zero-sum budgeting, James allocates every dollar of his income to specific categories to ensure he’s maximizing his financial resources. After allocating funds to these categories, James’s total expenses amount to $1,970, leaving him with $1,030 remaining from his $3,000 income. To ensure zero-sum budgeting, James assigns the remaining $1,030 to savings, debt repayment, or other financial goals.
By utilizing zero-sum budgeting, James ensures that every dollar of his income is accounted for and allocated toward specific expenses or financial objectives. This approach helps him stay disciplined with his spending, prioritize essential expenses, and work towards achieving his financial aspirations.
50-30-20 budgeting method
The 50-30-20 budgeting method divides after-tax income into three main categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. This method offers a simplified framework where individuals allocate their income into broad categories. Half of the income goes towards essential expenses like housing and utilities (needs), 30% is earmarked for non-essential spending such as dining out and entertainment (wants), and the remaining 20% is dedicated to savings and debt reduction efforts.
Key differences between the two
- Allocation approach: Zero-sum budgeting focuses on assigning every dollar of income to a specific purpose, whereas the 50-30-20 method provides broad guidelines for allocating income into three distinct categories.
- Flexibility: Zero-sum budgeting requires allocating all income, leaving no room for unassigned funds, while the 50-30-20 method allows for more flexibility within each category, potentially leaving some income unallocated.
- Detail vs. simplicity: Zero-sum budgeting provides a detailed breakdown of how every dollar is allocated, making it suitable for individuals who prefer a granular approach to budgeting. The 50-30-20 method offers a simpler framework, making it easier to implement and follow for some individuals.
Ultimately, both approaches can be effective tools for managing personal finances, and the choice between them depends on individual preferences, financial goals, and circumstances. Regardless, having an approach to budgeting is imperative to your success in renting an apartment!
Remember miscellaneous and one-time expenses
Renting an apartment involves more than just paying rent, renters insurance, and utilities. Remember that you will have to furnish your home and constantly purchase cleaning supplies to keep it fresh and livable. Additionally, moving costs are often a significant expense when renting an apartment. Whether you’re renting a moving truck or purchasing packing supplies, these expenses can add up quickly. While keeping costs low is possible for those with minimal belongings or short-distance moves, heavy furniture or long-distance relocations may necessitate hiring professional movers.
Beyond moving expenses, renting an apartment can also bring about unexpected costs and additional fees. From security deposits to pet fees or parking permits, it’s essential to budget for these potential expenses to avoid financial surprises down the line. Planning ahead and setting aside extra funds beyond your initial budget can provide a buffer against unexpected fees, ensuring you’re financially prepared for any situation.
budgeting is fun and helps you enjoy your home
Budgeting for your apartment involves more than just paying rent. It’s essential to consider all potential financial obligations to have a seamless transition into your new home. By planning ahead, budgeting effectively, and setting aside extra funds for unexpected expenses, you can navigate the rental process with confidence and financial stability!