How Much of Your Money Should You Be Spending on Rent?
One main aspect of maintaining a healthy budget is knowing how much you can afford to spend on various items. Rent is often the biggest part of a person’s monthly expenses, and determining how much you should spend on your rent can be tricky. While your income might indicate you can afford a certain amount, when you factor in other expenses, the amount that you can really comfortably afford can change. In addition to figuring out how much you can afford, your decision about how much to spend will depend on other factors. For example, you may be able to afford a certain amount, but you might only be willing to pay top dollar for a specific location and type of rental. You also have to decide how much space you need. Here are some important questions to consider when deciding how much of your money you can spend on rent.
1. How much can I afford?
The first thing you need to do when determining how much money you should spend on rent is to determine how much you can actually afford. An Affordability Calculator can help you start this step. Try this one by HousingConnections.org. A general rule of thumb is that you shouldn’t spend more than roughly thirty percent of your income on rent, but that rule doesn’t factor in all of your expenses, and usually, neither do affordability calculators.
The exact amount that you can afford will depend on your other debt and bills as well, and also, you should consider whether or not utilities are included in the rental price. Start by writing down all of your expenses, and then see what is left. Next, consider the following questions and determine how much you are comfortable spending on rent.