Rent tends to be one of the more expensive bills when it comes to financing and budgeting every month. It’s the major bill that causes people worry and stress. If you can’t afford rent, you won’t have a place to live. It’s important to calculate your rent budget before settling in a place.
The Rent Budget Rule
The suggested amount of money a person spends on their rent is 30% of their monthly income. This varies depending on the person and the apartment they want, but how much a person spends on an apartment should generally be between 20 and 40% of what they make each month. This rent affordability calculator can help determine how much that is for each person.
Security Deposit and First Month’s Rent
Some apartments have large security deposits that make it impossible to rent with them. Others charge security deposits, first month’s rent, and sometimes they charge broker’s fees. These costs should be factored in when renting an apartment. They are one time costs, but they have to be paid at the same time. Remember to budget for these, in addition to paying rent each month.
Considering the Amenities
When apartments have features and amenities, it can reduce the cost of spending someplace else. If an apartment has a gym, that removes the cost of a monthly gym membership. If it has laundry, you won’t have to spend your coins at a laundromat. Some apartments even come with special amenities, like: dog parks, pools, rooftops, and lounge areas. More amenities can be found here.
Another major factor in determining rent cost is utilities. Apartments that include utilities make saving money for rent easier. If your apartment includes utilities, you can stretch your budget more. This is a situation in which you could probably spend 35-40% of your monthly income on budget, if you want to.
Factoring in Other Bills
Though it is suggested that people spend 30% of their monthly income on rent, you should still budget for other bills. Consider how much you spend each month on groceries, insurance, your phone bill, loans, and anything else you want to buy. Then you’re left with a number that ensures you have enough for rent. Don’t, however, use this as a final number for what you can spend. Try to spend less if possible because you never know what unexpected cost will occur down the line.
Once you’ve set out a rent budget, you’ll be able to find the place of your dreams. Consider your spending costs and income when choosing an apartment. Also consider amenities and initial costs. Then you can truly find a new place to call home.