Is anything more exciting than the prospect of renting a new place? But getting excited is one thing—making it a financial reality is another. Before browsing listings and getting your heart set on new digs, ask yourself, “How much rent can I afford?”
Not totally sure? Get ready to take notes, because we’ve got you covered. Here are five tips to help you determine what your budget should be.
6 Steps to Answer the Question: How Much Rent Can I Afford?
1. Do a little budgeting.
This is a tricky tip because everyone’s budget is different, and there are many different budgeting methods. To simplify, Kelley Long of Financial Finesse suggests you try what’s known as the 50/30/20 Rule. “Fifty percent of your income should go towards fixed costs and needs like rent, transportation, utilities, groceries. Thirty percent should go toward wants, like dining out, entertainment, shopping and Netflix/SoulCycle/Uber/Spotify/Instacart fees. And 20 percent should go toward your goals, like paying down debt and saving for the future,” she says.