Rent is often the largest expense in your monthly budget, so determining how much of your income should go towards it is essential to avoid overspending. However, rent isn’t the only expense to consider — other costs like daily living and savings goals also can affect your budget. Figuring out how to allocate your income across all these categories can feel overwhelming, which is where budgeting comes in handy.
- How to calculate how much to spend on rent
- Calculate your rent budget with ForRent.com’s Rent Calculator
How to Calculate How Much to Spend on Rent
For most people, rent should account for roughly 30 percent of your gross income (your income before taxes and deductions). This isn’t a rigid rule; how much you spend depends on your lifestyle, priorities, and location. For instance, if you work from home or are a homebody you may decide to spend more of your budget for a larger or more comfortable apartment. Conversely, if you travel often or work on the road, you might get a smaller and less expensive space. Here’s how to calculate your rent budget based on the 30 percent guideline:
- Take your annual gross income and multiply it by 0.3 (30 percent).
- Divide the result by 12 to get your suggested monthly rent.
If your annual gross income is $50,000:
- 50,000 x .3 = 15,000
- 15,000 ÷ 12 = 1,250
This means you should spend around $1,250 per month on rent. But remember, this is just a guideline. If your other monthly expenses are lower, you might decide to allocate slightly more towards rent. You also need to take into consideration other apartment life costs like utilities.
Breaking down monthly expense categories
Your monthly expenses can generally be divided into three main categories:
- Living Expenses: These are necessities such as housing, insurance, groceries, transportation, and debt payments.
- Daily Expenses: These cover non-essential spending, including dining out, streaming subscriptions, and shopping.
- Savings: This includes contributions to an emergency fund, retirement accounts, or other financial goals.
What is the 50/30/20 budget rule?
The 50/30/20 budget is a simple method to organize your spending:
- Living expenses should be 50 percent of your budget. Rent and other essentials fall within this category.
- Try to spend 30 percent on daily expenses, wants, and non-necessities.
- Finally, 20 percent should be set aside for savings.
Within the 50 percent dedicated to living expenses, your rent should ideally take up 30 percent. Again, this isn’t set in stone — adjust based on your situation. The key is ensuring you’re saving consistently while maintaining a comfortable standard of living.
Calculate Your Rent Budget with ForRent.com’s Rent Calculator
Simplify the rent calculations with the Rent Calculator on ForRent.com. Once you enter your monthly income and select the percentage you want to allocate to rent, it will give you your rent budget. Whether you stick to the 30 percent rule or tweak it to fit your circumstances, using a rent affordability calculator can provide an easy-to-understand budget.
Using ForRent.com’s Rent Calculator
To get started, you’ll input your monthly income and decide on a percent of it to be spent on rent. It will do all the calculations and give you a rent budget. Then, you can see what amounts you should spend for your overall budget according to the 50/30/20 rule.
You can start your search by entering the area and how many beds and baths you want. The budget section is automatically filled out according to what the rent calculator determined. Once you hit the search button, it will take you to the map and the search results page with the filters applied.
FAQ
How do I calculate how much rent I can afford?
You might have heard the rule that about 30 percent of your gross income should go toward rent. While this is often considered a helpful guideline, it’s not a one-size-fits-all solution. What you choose to spend on rent depends on factors like where you live and what’s most important to you. If your living expenses are minimal, for instance, you may find it manageable to allocate more of your budget to rent without feeling financially strained.
What should I spend on rent if I earn $50k?
On a $50,000 annual salary, your gross monthly income comes out to $4,167. To keep your finances balanced, it’s recommended that rent takes up no more than 30% of your gross monthly income. With this guideline, you can afford a monthly rent of $1,250.
What should I spend on rent if I earn $60k?
If you make $60,000 annually, your monthly income before taxes comes to $5,000. Based on the 30-percent rule, it’s recommended to allocate around $1,500 per month toward rent.