Don’t Overspend on Rent

| May 24, 2013 | 2 Comments

Are you paying too much for rent? How would you know if you were? According to the US Census Bureau, 25% -30% of your gross income is an ideal amount to budget toward rent. In addition to rent, remember to factor in another 3-4% for housing expenses, like utility costs. When setting your budget for a new place, be sure to follow these tips to prevent overspending.

Orange Apartment Building 1

Calculate How Much to Spend on Rent

Step 1: Evaluate your total income. If you have a roommate, combine your incomes together and follow the same process. (Although if you fear you might not want to live with a roommate forever, perhaps budgeting on one salary can be beneficial.)

Step 2: If you choose to spend 25% of your income on rent and utilities, multiply the gross income by 0.25.

Step 3: Divide the total amount from Step 2 by 12 months, and you will have the recommended maximum amount to spend on rent and utilities.

Example: (The following income rates are from the 2013 average starting salaries for recent graduates via CNN Money.)

No Roommate

You & Roommate

Step 1 Income:  $44,000 /yr Combined Income: $37,000 + $61,000 = $98,000 /yr
Step 2 $44,000 x 0.25 = $11,000 / yr $98,000 x 0.25 = $24,500/yr
Step 3 $11,000 / 12 months = $917/month $24,500 /12 months = $2042 /mo

If you plan to spend only 25% of your gross income, and are making $44,000 a year without a roommate, it is recommended that you spend no more than $917 on rent and utilities.

If you budget 25% of your income toward rent and utilities, and make a combined income of $98,000 with a roommate, it is recommended that you spend no more than $1021 for your portion, if rooms are equal.

It is our hope that these tips help you avoid overspending on rent during your next apartment hunt. To find reasonably priced apartments in your area, visit ForRent.com. For more ways to save money on rent, be sure to browse the Apartment Living blog for great ideas!

Category: College Life

About Hyon Cho: Hello! I’m Jiney, a Social Media Coordinator for ForRent.com since January 2013 as well as a renter for the past few years. I want to provide you with interesting and useful articles that will help make your apartment life experience a lot better. When I’m not at work writing blogs or social media updates, you can assume I’m within 10 ft of a computer surfing the Internet for funny clips and music on YouTube, watching streams, or shopping online!

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Comments (2)

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  1. Kristen says:

    I found the suggested percentage of gross income and the calculations helpful. Since this article is tagged for “College Life”, it will possibly be read by younger people who do not have a great amount of experience living on their own. What this article is lacking IMHO is the definition of “utilities”. For example, are utilities just heat/elec/water/sewer/garbage? Or do utilities include the extra, nice, but not essential utilities like phone, cable and internet? College students usually live on very tight budgets. The difference in the cost of the essential utilities and essentials plus the ‘nice’ utilities could mean a world of hurt in managing their monthly budget.

  2. Caryl Anne says:

    This article is interesting and very informative! I’m sure anyone reading this article will find this article helpful and insightful! Thanks so much for sharing!

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