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How much should you spend on rent?

Looking to rent but not sure what you can afford? There's a popular 30% rule but is it accurate? Get the breakdown on how much to spend on rent.

When shopping for a wedding dress, I was given some sound advice: don’t try it on if you can’t afford it. Because if you fall in love with it, you will either be heartbroken when you can’t have it or you’ll blow your budget to get it.

What I love about this advice is that it is applicable to more than just wedding dress shopping.

For example, it works just as well when figuring how much rent you can afford. After all, the last thing you want to do is find your dream apartment only to discover it’s way out of your budget.

Determine how much rent you can afford

Here are some rules of thumb to use when determining how much of your income should go to rent:

The 30% rule

This rule is about as quick and easy as it gets when trying to decide how much you can afford to spend on rent: you should spend about 30% of your gross monthly income (before taxes) on rent.

Keep in mind the 30% rule doesn’t include utilities or any other housing expenses — it’s 30% of your gross income on rent alone.  

So, if you bring home $3,000 per month, then you should aim to spend around $900 (or less) on your monthly rent ($3,000 x 0.30 = $900).

Context around the 30% rule

Keep in mind, this is just a general rule. It doesn’t cover your full financial picture or personal financial situation. The 30% rule is ultimately a starting point to bounce off of, but you may still need to adjust this figure based on what works best for you and your monthly budget.

  • For example, if you live in a city with high rental prices then you might be required to pay more than 30% just to find suitable housing. In New York, for example, you might run into the 40X rent rule.
  • If you’re doing just okay with student loan payments or other loans, then spending 30% on rent might be too high at this current time.
  • If you’re a higher earner then less than 30% may make sense as just subscribing to that rule may be irresponsible spending given you could be looking into purchasing a house or condo.

The 30% rule has its origins in 1937 and the U.S. National Housing Act, which created the public housing program for low-income families. Income limits were established as eligibility for families that wanted to live in public housing. Back then, the rule was that, “a tenant’s income could not exceed five to six times the rent.” 

Since then, the limit has increased. In 1961, the Housing and Urban Development Act established that the rent threshold should not exceed 25% of a family’s income. This was then raised to 30% in 1981 — a benchmark that’s since stayed the same.

The 50/30/20 budget rule

Another simple rule for determining how much of your income should go to rent is the 50/30/20 budget. This rule states you cam use 50% of your net income (after taxes) for your “needs.” Your needs include things like housing, utilities, car payments, and groceries.

Next, allot 30% of your monthly income for wants — things like clothing, eating out, and hobbies.

The remaining 20% should go towards saving, investing, and debt repayment. 

So, if you bring home $3,000 per month after taxes, this would give you $1,500 per month to spend on your needs, $900 for wants, and $600 split between savings account with a competitive interest rate, debt repayment:, and an investment account:

  • To calculate 50% ($3,000 x 0.50 = $1,500).
  • To calculate 30% ($3,000 x 0.30 = $900).
  • To calculate 20% ($3,000 x 0.20 = $600).

Remember, the 50% is for all your needs, not just your rent alone. So make sure you have a good idea of how much you spend per month on things like food and utilities before deciding the exact amount you can put towards rent. 

The 50/30/20 rule was popularized by Senator Elizabeth Warren and her daughter Amelia Warren Tyagi in their book, “All Your Worth: The Ultimate Lifetime Money Plan.” 

» MORE: Learn how to start budgeting

Other considerations besides rent

While these rules of thumb are helpful starting points for determining how much rent you can afford, there are several other factors to consider — such as other expenses associated with renting, where you want to live, how much debt you have, and the kind of lifestyle you want. 

Additional costs associated with renting

Your monthly rent payment will likely be your largest housing expense, but it’s not the only expense when figuring out how much it cost to live alone. Often landlords require all sorts of extras. Here are some other things you’ll need to factor in:

  • Moving costs.
  • Security deposit.
  • Pet deposit.
  • Utility payments.
  • Renters insurance.
  • Parking.
  • Commuting costs.

Location of your rental

If you’re looking in a high-cost-of-living city like San Francisco, where the average cost of a one-bedroom apartment is around $3,000, then you might have to spend more than the recommended benchmark amount (or get four roommates).

On the other hand, if you’re looking for a place in a low-cost-of-living city and you make a high salary, you might spend less.

How much debt do you have

You also have to consider how much debt you are carrying. If you are completely debt-free, then you might be able to pay a little more to your rent.

If you are drowning in student loans and credit card debt, then you probably need to be putting more of your income towards debt repayment

Type of lifestyle

This is very important: don’t forget to think about the type of life you want to live. Your spending habits along with both your short and long term financial goals matter. You’ll need to weigh levels of priority

If you enjoy going out for dinner or spending extra money on hobbies, then make sure you are budgeting for these things. You don’t want to be house-poor and forced to spend all your time at home if what you enjoy most in life is being out and about. 

How to reduce what you spend on rent

If you want to decrease your housing expenses, there are some things you can do to reduce what you spend on rent:

  • Move to a city with a lower cost of living. If you can work remotely or you have the option to move to a cheaper city, consider doing it.
  • Move farther outside the city. Living in the city core can be expensive. If you want to reduce your rent, you can look into moving to the suburbs. This will often afford you more space for less money. 
  • Get a roommate. Splitting housing costs with a few roommates can drastically reduce the amount you are spending on rent each month. 
  • Negotiate with your landlord. Depending on where you live and the demand for rentals, you might be able to negotiate the cost of rent with your landlord. You can offer to prepay for a few months upfront in exchange for a discount. Or you could offer to extend the length of your lease if they are willing to reduce the monthly rent. 
  • Offer to help your landlord. If you’re the handy type, offer your services to your landlord in exchange for reduced rent. Maybe you could paint or do minor fixes around the place for a cheaper monthly bill.

The bottom line

For many of us, we are spending the largest chunk of our income on rent.

While what you should spend on one month’s rent comes down to a few personal factors, like where you live and how much debt you’re carrying, simple rules like the 30% rule or the 50/30/20 budget can help set a baseline for what you can afford.

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