Budget 101: Determining Your Rent Budget
It can be tricky to figure out how much to spend on rent, especially if you are a first-time renter, have never lived alone, or on the flip side, are moving in with a partner or roommate for the first time. Figuring out after-the-fact that you can’t afford your monthly rent is going to cause a lot of stress for you, your partner or roommate, and your landlord. Here is our budget 101 course to help you determine your rent budget.
Budget 101: Organize Your Finances
The most important, and probably the most daunting, step in apartment hunting is figuring out how much to spend on rent. Many experts say that you should spend no more than one-third of your income on rent per year. This means that if you earn a salary of $50,000, you should aim to spend no more than about $1,380 per month on housing. But let’s be honest–it’s always best to be safe when it comes to making monetary promises. If you don’t think that you can afford to spend a third of your income on rent, DON’T DO IT.
Websites like Mint.com are fabulous for renters, because they allow you to sync your bank accounts, credit lines and investments to one easy-to-understand budgeting tool. Mint.com is considered very safe, and it is quickly growing in popularity. After you’ve added your accounts to the site, you can set a monthly budget for everything from groceries to renters’ insurance to a vacation fund. Play around with your numbers for a while if you aren’t used to budgeting. After you’ve configured a budget that you can live with, you’ll know exactly how much you should be spending on rent.
Budget 101: Follow Through
Let’s face it–creating a budget is useless if you don’t stick to it. Don’t look at apartments that you know are out of your price range; you’re bound to fall in love with them. You should also consider how various neighborhoods will affect your ability to pay rent. Maybe you can afford a sweet pad in a far-away suburb, but how will your budget be affected by shelling out for gas?
If you take all of your expenses into account prior to apartment hunting, you should find that knowing how much to spend on rent isn’t really that complicated: How much should you pay for rent? The simple answer is whatever you can afford.