As college students graduate this month, many will be taking the monumental step of renting their first apartment. The New Jersey Society of Certified Public Accountants (NJSCPA) offers the following advice on getting the right start.
Create a Budget
As you set off on your own, a personal budget is essential because it helps you to maintain some control over how your money is spent and makes it possible to manage your finances wisely. Before you begin your apartment search, know how much rent you can afford. This means it’s time to create your first budget.
Make a list of your expected expenses, such as utilities, phone, cable and Internet bills, auto loans or commuting costs, an estimate of the cost of groceries, as well as student loan payments or other regular monthly bills. Once you’ve added up all the necessities, deduct that amount from your monthly total earnings after taxes. Given what’s left, consider how much you can realistically spend on rent.
You want to get good value for your rental dollars, especially if they are limited. That means it’s a smart idea to look at several apartments in different neighborhoods in order to understand what’s available in your price range.
Don’t be swayed by a persuasive advertisement that promises a dream apartment. Check out each option to see if you would feel comfortable living in the area and if the building is well kept and suits your needs.
Read the Lease
The lease for your apartment is a formal legal document, so be sure that you understand what you’re agreeing to before you sign. Don’t sign a three-year lease if you expect to relocate soon, since you will be responsible for the rent for the entire lease term. If you have pets, make sure the lease does not prohibit them. If you plan to have a roommate, make sure there are no restrictions on apartment sharing. In general, get a good sense of the lease’s requirements and limitations, and be sure they are in sync with your plans.
Be Aware of the Added Costs
Rent is not the only expense associated with a new apartment. Your landlord may also ask for a security deposit, usually about one month’s rent that is held until you move out. If a realtor finds the apartment for you, he or she may also charge a fee. Find out, too, whether the rent includes utilities, such as water, electricity and heat or if you will have to pay for those separately.
Look into Renter’s Insurance
Renter’s insurance will reimburse you for items stolen from your apartment or for damages to your possessions in case of a fire, flood or other disaster. Although it means an added monthly expense, without this insurance you will have to pay to replace your belongings from your own pocket, so it’s well worth considering.
Consult Your CPA
CPAs have the expertise to advise you on a variety of financial issues. As you move into your first home, remember to turn to your local CPA with all your financial questions. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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