How much can I spend on rent?
While the answer can vary from person to person based on their individual financial situation and how they handle the combination of income, expenses, and saving, the general rule of thumb from most guidance available is to spend a maximum of 30% of your income on rent. Using the 30% rule can be a great place to start when trying to determine how much rent you can afford, but you will also want to consider your other monthly bills and expenses like groceries and gas to determine the right price specific for you. If you love to go out and spend a lot of money, then you’ll want to notch down the 30% a bit, but if you are someone who saves a lot of money and doesn’t spend much then you might be able to stretch it a bit more for fancier digs.
How do I figure out what I should spend then?
Calculating a maximum rent range that is likely right for you might seem a little confusing at first. Most landlords and leasing teams will want their tenants to stay below 30% of their income, so that paying rent is never a strain. Keep in mind that 30% is not the end all be all — it’s a general starting point. While this should not be taken as official financial advice, the ApartmentHomeLiving.com Rent Calculator can be a helpful tool to get a general idea of how much rent you might be able to afford. You will want to take a look at how much monthly income you bring in and then subtract taxes, expenses, bills, debt, and savings goals, while also taking into account things like lifestyle, location, family size. If the remaining amount is not enough to cover the cost of rent based on the 30% rule, then you likely need to bring that percentage down a few points.
Give the calculator a spin to see if you can find a range that works for you. Please be aware that it is not to be used as official financial advice. For official financial advice, please contact your Financial Advisor.
