How to Judge What to Spend on Rent

How to Judge What to Spend on Rent

For many people, rent makes up the largest monthly expenditure. Though you might like the idea of enjoying a luxurious home in which you can be truly comfortable, you shouldn't make life more difficult by committing yourself to pay a rent that is just too high for your budget. To ensure that your rent doesn't leave you penniless, carefully calculate how much you can reasonably dedicate to this expense.

Instructions

    1

    Calculate your total take-home income. Add up all of your monthly income that is dependable. Include income that doesn't fluctuate, not income that comes and goes. For example, if you sometimes babysit for neighbors' children, don't include that money since can't depend on it from month to month.

    2

    Multiply your regular income by 0.25 to determine 25 percent of your total take-home income. This is the percentage many financial experts say is the maximum to dedicate to your rent.

    3

    Set that figure as your rental price cap. While you might decide to go ever so slightly above this cap if you find an apartment that you simply can't pass up, don't go more than 2 to 3 percentage points higher. If you do, you run the risk of setting yourself up for financial hardship that you could have avoided.



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