Finding a rental comes with its share of considerations, including the size and location. To begin with, you must determine whether you can afford the monthly rent. However, establishing whether you can afford the rent can be daunting, particularly if you’re a first-time renter.
Bear in mind that determining the rent budget involves various considerations, ranging from your values to financial means. Here’s a look at important tips to consider when determining a suitable rent budget.
1. Determine a Budget
You must evaluate your income, including any bonuses or other means of revenue. If you aren’t certain about where to start, you could easily determine your budget with simple budget calculators.
You should anticipate spending approximately 60% of the budget on the major budget items, including food, housing, and transportation. Don’t surpass this number because you’ll require cash for emergency funds, entertainment, insurance, and other expenses.
2. Adjust the Budget to Your Needs and Lifestyle
You shouldn’t be too quick to consider budgets like the 50/30/20 rule. Instead, you can use them as a customizable scale. You want to create a budget that suits your financial means and personal values. For instance, if you value traveling, you might want to opt for a lower rental.
The most significant aspect is adjusting your budget to accommodate your expenses. Don’t just go beyond your means while hoping for the best. The figures must add up; otherwise, you’ll end up with debts.
3. Establish the Bottom Line with Utilities
When calculating future rent expenses, ensure you include utilities, which could mean the difference between rent affordability and struggling to make ends meet. If you notice that the rent cost and utilities surpass 50% of your income, perhaps you should look elsewhere.
You might want to include other bills such as laundry and water bills. Remember, location and amenities also factor into a rental’s affordability. If the unit comprises a gym, it should be possible to cancel your current gym membership.
On the other hand, if extra fees exist such as a parking fee, the rental could end up being less affordable because the charges could add up. Ensure you assess all the utilities and amenities thoroughly to identify what you’re getting into and weigh your options.
4. Consider the Housing Market
The rental market in your residential area will make a huge difference. For instance, if you’re in a high-demand market such as Los Angeles or New York, you’ll discover that the rent far surpasses 30% or 50% of the middle-income budget. In such instances, it might be necessary to adjust other budget areas to determine the rent you can afford.
5. Exclude Credit Accounts and Savings
It might be tempting to grab some money from emergency and savings accounts to cover the rent. Don’t do so because you won’t have a safety net. On the same note, you shouldn’t use credit cards or take out personal loans to cover expenses, including one-time moving expenditures.
Also, if you find yourself charging groceries to make timely rent payments, it’s an indication that the budget is overstretched and you need to re-examine your budget.
Although finding and moving into a new rental can be exciting, you should find one you can afford comfortably. Nonetheless, this might prove challenging if you’re a first-time renter. Fortunately, these tips offer invaluable advice on the factors to consider when determining a suitable rent budget.
For more information on how to determine a comfortable rent budget, contact us at Apartment Agents or leave a message.