How Much Should You Spend on Rent?

Housing costs usually take up the biggest chunk of people’s budget, especially if you’re on your own for the first time. So before you sign that lease it’s a good idea to do some math and think ahead. This way you’ll get a clear picture of what you can afford, how it fits with your priorities and goals and the lifestyle you want to live.

The 30% Rule

A good rule of thumb is to spend no more than 30% of your gross monthly income on rent. This figure typically includes utilities, internet access, and similar expenses. If you can hit this goal, you’re unlikely to miss payments and more likely to have money left over to spend or save.

Your Mileage May Vary

The 30% rule is just a guideline. Depending on your circumstances, you may spend more or less on rent. Living in the big city? You’ll likely pay more. And you certainly don’t have to pay 30% of your income if you can spend less.

More important than the exact percentage you pay is that you’re intentional. A great way to be intentional with your money is to use a budget. When you have a plan for your money beforehand, you’re much less likely to fall into debt or miss payments.

You might have to make tradeoffs. Prioritize your spending on what is most important to you. If you love living downtown in the city, it may be worth it to pay more on rent. If you’re still paying off student loans or other debt, it might be worth it to commute and live somewhere more affordable. You’re in charge of your budget, and that’s a good thing!

Need to Start a Budget?

Horizon’s online and mobile banking services make money management easier than ever. And they’re completely free for members! Set up online banking to get our powerful budgeting tool Money Tracker, automatic bill pay and 24/7 account access today!

Read more articles like this on HZCU’s Financial Knowledge Hub.