When I was in college, I was adamantly against the idea of ever living by myself. I can remember having a conversation on my friend's dorm room bed about how I thought living alone would be boring. I also thought it would be weird to spend so much time alone, and that it would be scary to live by yourself. Never once did the thought cross my mind that perhaps I wouldn’t even be able to afford living alone.
After college, the real world has let me know that the financial part of living alone just may be the most important part of the equation. My feelings have also done a complete 180 since those halcyon college days. Living alone no longer seems scary, but rather downright delightful. To know that no one else will leave dirty dishes in the sink, or will come home loudly at 1am...what a dream!
As you may have guessed by now, I have never lived alone. I’ve always had at least one roommate. Currently, I have two. At my roommate peak, I lived in a house with three other people, and we all had significant others. There were nights when there were eight people in the house! That’s way too many people, trust me.
Around age 27 I began to really consider living alone. I wanted to create my own space and not have to compromise on anything. I wanted to decorate my home to my exact tastes, and I wanted the whole fridge to be my food area. Simply put, I wanted independence in my home space.
After crunching some numbers, it became clear that if I were to live alone, roughly 70% of my monthly income would go to rent and utilities. For me, that was not definitely not feasible. I’d have to compromise on my other budgets like food and gas, and my savings goals for things like travel would have to come to a complete halt.
As much as I want to be the king of my own castle, today I live with my boyfriend and one other roommate. Our individual costs are pretty low, and we all get along very well. Living with two other people has allowed me to ramp up my savings and put away more for retirement this year than any year prior. For me, it’s more important to keep my living costs low in order to reach other financial goals.
It’s a compromise, though, and one not everyone is willing to make. I have a friend who recently moved into her own place as she was transitioning to a lower paying job. It was a financial risk that she was willing to make for the sake of having complete control on her homefront.
You may be sick enough of being the only one who replaces the toilet paper in your house to be dreaming of your own space. Before you pick out the perfect movie poster to hang in your living room, let’s see how much rent you can afford on your own.
Determining How Much Rent You Can Afford
Rent is one of those things that you can’t escape from. Unless you own a home outright, you’ll pay for a space to live for a large part of your life. So it’s important to keep that number manageable.
A good rule of thumb is to spend no more than ¼ of your monthly income on housing. If you take home $3,000 a month, that means you have $750 to spend. And never forget, utilities are in addition to rent - make sure you include them in that $750 number. Utilities can fluctuate month to month depending on your usage. It’s important to remember that you’ll want to give yourself some wiggle room in that number.
Don't Forget About the Upfront Costs...
Getting a place by yourself also means that you’re fronting the security deposit and, often, first and last month’s rent. Let’s say you find yourself a sweet loft apartment for $600 a month. You estimate utilities will be about $100 a month, so you’re well within your $750 budget for housing expenses. The security deposit could be a whole month's rent, and then you have to put down $1,200 for first and last month’s rent. That means you'll have to put $1,800 down on the spot to move in.
Another cost associated with living by yourself is furnishing an apartment. You’re going to need some place to sit, some place to sleep, and you’ll probably want something to watch NetFlix on. I personally struggle with this. I always think "Oh, we’ll get it on CraigsList," forgetting that CraigsList is not a store that always carries exactly what I need when I need it. The things I need are not always available, or they’re not in the style I want. It’s a double edged sword!
If you try to go the budget route and look to CraigsList and thrift stores for your furnishings, you could be stuck without a coffee table for months. If you purchase all new things, that could be a huge cost that you have to carry by yourself.
...And the Ongoing Costs
Living by yourself also means that you’re the only one buying the food, toilet paper, and toothpaste. No one else will replace the butter you used to make cookie dough so you could eat it directly out of the bowl. Living expenses can skyrocket when you’re living solo. You should be prepared for that shift in your monthly budget.
When you break it down this way, it becomes clear that living by yourself is not just about the rent price. You have to ask yourself: can I afford the upfront costs of living alone and the ensuing costs month to month moving forward?
Get Really Honest About Your Priorities
This is a time to be honest with yourself. As seductive as living alone can be, you don’t want to find yourself in a position where your living expenses have spiraled out of control - no matter how cute that loft is! Don’t let your housing dream become a nightmare. Remember, we’re trying to keep it at 25% of your take home monthly pay.
If you’re able to afford the upfront costs and can keep the monthly costs at ¼ of your pay going forward, I say sign that lease today. Living alone is something it feels like fewer and fewer people are getting to experience. Many millennials work part-time jobs or are stuck in low-paying jobs. This is leading many of them to live with roommates for longer into their adulthood than their parents did. If you can venture out on your own, know that I am jealous of your fortress of solitude.
Consider Other Factors That Could Lower the Rent Number
Speaking of me, let’s get back to my situation. Like I said earlier, I have two roommates at the moment. As a result, my monthly spending on rent and utilities hovers at roughly 20% of my take home pay. I also live in my first choice neighborhood. (Hello, three coffee shops in walking distance!)
My boyfriend and I considered living together just the two of us. If we had gone that route, my expenses would likely be about 33% of my monthly pay. Not crazy high, but higher than I would have been comfortable with. So we opted to live with another person to make sure we could save at the rate we wanted to and to be in the part of town we wanted to be in.
How Many Roommates Do You Need?
Just because you need a roommate doesn’t mean you need all the roommates. You don’t have to live in a house with three other people who all have houseguests. If you are comfortably meeting your other financial goals and regularly tucking away money in savings, you might be at the point where you need fewer roommates. Upgrade yourself from four roommates to just one roommate. There’s no rule that says you have to live in a frat house for all of your adult life.
Consider Different Locations
You can also consider changing locations. If you can’t afford a fancy downtown apartment, try looking outside of your city's epicenter for a more affordable rent. Of course, this comes with the caveat that you’ll need to consider commuting expenses to and from work. Generally, those are much lower than rent prices.
Coming to a Decision: To Have Roommates Or Not to Have Roommates?
I may never reach the golden mountain top of living alone. If I ever do reach that peak, though, I plan to follow the 1/4 rule. Housing is important, but it’s not something that I’m willing to go broke for. Looking at the bigger picture of living alone (rent, deposits and furnishing a house) makes me grateful for the situation I have now. Sometimes it pays (literally) to take a step back and consider things from a new angle.
For those of you who are ready to take the leap into living on your own, I salute you! Pick out that movie poster, leave your dishes wherever you want to. You pay rent, and you make the rules. Just invite the rest of us over some time to see how the other half lives.