Some states put a cap on the SD. For instance, in NJ, the security deposit cannot be more than 1 1/2 times the rent.
The SD should never act as last month's rent. If a tenant uses it for last month's rent and you find damages they did in the apartment, how are you going to get them to pay you of it?
The SD should be paid upfront before you hand them the keys to your home. What's to guarantee that they will make payments on it? It will not be a priority of the tenant and it will be difficult for you to evict them based on the reason that they didn't pay a SD.
The SD is for the LL's protection, not the tenant's convenience of rainy day moving fund or an installment plan.