How To Determine How Much Your Rent You Can Afford

When you are first starting out in the apartment search one of the very first things you should ask yourself is "How much rent can I afford?" It's important to be honest with yourself so that you don't get bound into a stressful financial situation, but you should live happily in your means. Most people know what they want in an apartment such as the location, how many rooms, parking etc., but it is best to determine your budget first. If next year when your lease is up and you're making more money, go ahead and move into a more expensive spot. Before you start browsing the list of available apartments, calculating how much rent you can afford is key. This calculation is not complicated and it is based upon your current income, or the combined income of total number of people who will be living and paying rent in the apartment.

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Your Income Calculation

When you're going thought the apartment hunting and application process your landlord or property management company will require proof of income. You will have to prove that you make a certain amount of income to qualify for the apartment and for the landlord to feel confident that you will be able to pay your rent every month. In general, the industry standard is that your rent should be around 30% of your income. This calculation allows you to live comfortably and always pay your rent on time.

Think About Your Lifestyle

It's important to remember that your income calculation will need to be adjusted based upon your actual take home income. Taxes can significantly affect our net income and it may be surprising how much smaller this number is than you thought. This is the amount of actual disposable money you have to spend, and you want to make sure that your rent only makes up 30% of it. Be sure to consider the other things you want to put your money towards. Do you love traveling? Do you like to go out to dinner? You want to be able to enjoy your life without having to always pinch your pennies. Also, if you have children you'll want to think about how much they cost per month, like the expense of childcare, and make sure you can comfortably provide for them.

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Factor in all Expenses

Unfortunately your monthly rent payment doesn't cover all of the costs of living. Consider the cost of utilities such as trash, water, electricity, and cable and also think about renters insurance and if you need to pay for parking. These bills usually are about 10% - 20% of your rent and will come every month. If you're living with one or more roommates these bills will likely be split between everyone, but if you are living alone these bills will be your sole responsibility. If you're moving into an unfurnished apartment furniture like couches, beds, TVs etc are expensive along with household supplies. You want to be able to buy what you need without feeling strapped for cash.

Ultimately, the better you understand your budget and your average spending habits the better off you will be in all aspects of your life. Living is expensive and it's important to have enough to pay your bills, save for the future, and have a little fun too!

Published on Friday, January 27, 2017