Asking yourself how much rent you can afford is the first step when you plan to find a new home. Answering this question can be the starting point to deciding where you want to live and what kind of place you want to rent.
Spend 20% On RentIf you spend 20% of your income on rent, you have more money left for other things. You could decide to spend more money on non-essentials, invest more for retirement, or surprise your loved ones with a gift.
Spend 30% On RentSpending 30% of your salary on rent is what most people are going for. You have enough money left to buy other essentials while living in a decent apartment. It is the sweet spot between an affordable apartment and an apartment where you feel at home and comfortable.
Spend 40% On RentSpending 40% of your salary on rent mostly occurs when you don’t set a budget for yourself, and you see a home that you like. The house is perfect for you and a little expensive, but you really want to live there.
While it is okay to spend 40% of your income on rent, make sure you have thought about it. You want to make it a conscious decision. You want to prevent that two months into living there you notice that you don’t have enough money left to keep up with your standard of living.
The rental market varies widely from place to place. Where you live makes a big difference in how much rent you pay. If you want to live in popular cities like New York, San Fransisco, or Los Angeles, rent is higher than in other cities or states.