If you are looking for a new place to live, coming up with the amount you want to spend on rent can be complicated. However, rent will make up a major part of your expenses so you want to be careful not enter into a lease on a place you can not afford.
So how exactly do you budget for rent? This article will give you some valuable tips that will help you know how much you can afford to set aside.
How much of My Income Should I Devote to Rent?
The first step to deciding how much you want to spend on rent will be to figure out what your total monthly income is. This shouldn’t betoo difficult if you only work one job. However, if you have multiple jobs or sources of income that vary over the course of the year, this may be more complicated. However, if you look over tax returns and bank accounts you will be able to come up with a pretty good approximation.
It’s a general rule of thumb that your rent should be no more than 30% of your gross income. If you find an apartment that is a bit above what you want to spend, you can negotiate with the landlord to settle on a lower amount.
You should also consider what amenities come with the building and figure that into your expenses. For instance, if the place has paid utilities or comes with furniture, that could save you money. If it is close to your work, you could end up saving on gas. If it has an onsite gym, you may be able to cancel your gym membership and save money that way.
It is also important to consider that there will be a lot of upfront expenses when you first move in to your new place. These will include moving expenses and a security deposit for the first and last month’s rent. Therefore, you must be sure to have a bit saved up before you make your move.
Make a Budget
You may be moving into a new space or this may be your first time renting. Either way, taking on a new or different financial responsibility means you will have to budget accordingly. That’s why it’s always a good idea to create a budget sheet to account for the money you are spending and what it is being spent on.
Figuring out how much money you have and how much you can afford to devote to rent may be complicated, especially when you consider what other expenses you have. However, the internet provides many resources that can help you figure out how much you can afford to spend on rent by just entering a few numbers.
RentCafe has a rent affordability calculator that can be accessed online. Mint.com is another great resource that allows you to sync your bank accounts, credit lines, and investments in one budgeting tool. After you’ve added your information to the account, you can set monthly budgets for everything from groceries to rent to entertainment expenses.
Should I Rent a House or An Apartment?
The decision to rent a house or an apartment is one that will depend on your personal situation. However, here are a few factors to consider.
Space: Houses tend to be more spacious than apartments. Therefore, if you are looking for a place for a family or a group of people, a home may be a better option.
Expenses: A house tends to be more expensive than an apartment but the added expense may be worth it to people who appreciate the privacy and added space. Also, expenses could be lower if you decide to rent out rooms to roommates, which will be easier to do if you live in a house with a lot of rooms. Utilities are also likely to be more expensive if you’re living in a house.
However, renters are more likely to face certain expenses if they live in an apartment. These can include the following:
- Pet fees
- Garbage pick up
- Pest control
- Storage and garage
- Administration fees
When you consider all this, expenses can begin to even out.
Amenities: When it comes to amenities, privacy and space is one thing a home will offer. They also may be a better choice if you have a pet. A house may have a yard where your pet can play. Houses may also have more lenient policies when it comes to pet ownership.
However, today apartments tend to be pet friendly as well. They are also more likely to come with intercom security or a doorman, a gym, a laundry room and more. Consider what’s important to you in deciding if you prefer the amenities a house or apartment has to offer.
If you are renting your first place or moving into a new one, the amount of rent you pay will be a huge deciding factor in determining the place you choose. Figuring out your budget and considering what each living situation has to offer will help you get closer to making a decision that’s right for you. Best of luck in choosing a place that suits your needs.