As a tenant, it’s only natural to ask questions how much your income must be rented. With salaries, bills, and other expenses, it can be confusing to know how much you can.
Although there are general guidelines to be followed, not everyone has number one size for all. To help you plan, we will discuss some tips and guidelines to keep you on the track.
From how much your salary must be rented to how to save more money, you have covered this guide. We will discuss everything you need to know about your monthly rental and budget.
Rules 30%: How much do I have to spend for rent?
The 30% rule is a practical financial rule where no more than 30% of your income goes into your housing fee. With this rule, if your gross income is $ 5,000 a month, you may not pay more than $ 1,500 a month for rent and housing fees.
When you go to make a housing budget, consider this rule in your plan. You want to enter additional fees for parking or utility. If your rent is $ 1,500 plus $ 200 for parking, it puts you a total of $ 1,700.
You also need to enter gas, electricity, and other utilities. If your goal is $ 1,500, rent $ 1,200 plus utility is a good benchmark.
When you apply for an apartment, your owner will also see this ratio to determine whether you are able to pay rent. This general rule helps to show the landlord that you can safely pay rent on time every month.
30% rule is not appropriate for everyone
The 30% rule does not always succeed in every situation. If you have a student loan, for example, it is almost impossible to cover rent other than large student loan bills. The same applies to credit cards and other debt.
This rule also does not consider inflation, residential markets, and rental rates. Rent in certain places is very expensive. In other areas, housing is far more affordable.
If you have a higher income, the 30% rule is not always the best idea. Just because you get six numbers, it doesn’t mean you need to spend 30% of your income. You will better save money for a down payment or retirement.
This is a good ratio to start if you try to live with a limited budget. This helps make sure you can pay rent, your other bills, and stay above your finances.
How to save money for rent
If you are worried that your rent will be more than 30% of your income, there is a way to stay according to the budget. The first way to make more affordable rent is to get a roommate. You and your roommate can share rent and utilities.
If you rent a house, you can be the owner. Rent one or two additional rooms for saving. You can also share food and even Carpool to save money.
If you need to save more money for rent, talk to your owner about a longer rental period. In some cases, your owner will give you a rental agreement if you sign for two years, not one.
You can also ask your homeowner if they need work done as sacrifice. If they can drop money from your rent, you can wash the floor in the lobby or do the landscape. Whatever you can offer to homeowners as a service can help save money.
When you are out of town, you can also rent your apartment on a vacation rental site. The income you produce can help balance some of your rental.
Where to save in another way
If it’s tight money, there is another way to save money. First, you must write all your income and expenses. This will help you determine how much is left to be rented.
See everything you are paying right now. Things like entertainment and eating outside can be cut if needed. You can even find subscriptions or services that you don’t use anymore.
If you can, cook food at home. Make your own coffee and bring your own lunch. You will be surprised by how much money you can save.
You can also search to pay off your debt. Paying a credit card or small bill will help reduce your monthly expenses.
When choosing your apartment, if you find you’re going over budget, your location can save you money in other ways. An apartment close to public transportation could mean you can sell your car.
If you can take public transit to work, you can save on car payments, parking, and car insurance. If rent is more expensive but it includes amenities such as a fitness center, you’ll save money on gym memberships.
How Much of Your Income Should Go to Rent?
So how much of your salary should go to rent? The answer to this question isn’t going to be the same for everyone. Depending on where you live and how much your other bills are, there isn’t always a magic number.
How much of your income should go to rent? Keep the 30% rule in mind and use your best judgment. Keep your living expenses down and keep saving when you can.
If you need access to cash to pay off debt or pay rent quickly, fill out the contact form your finance. You’ll be put in touch with a loan professional who can show you different options.