How Much Rent Can You Afford?

When you find an apartment you love, you must make sure it is something you can afford.  There is no worse feeling than looking for an apartment, finding an amazing place and then realizing you cannot afford it.

So before you even begin your search make sure you get your finances in order and make a budget so that you know exactly what you can afford before you sign on that dotted line.

Budget your finances
Budgeting is a crucial step in the process of finding out how much rent you can afford in your new apartment.  When looking at your finances and figuring out a budget, you have, to be honest about your spending habits so that you can get the most out of the process.  Sit down and go through the past years bank statements and separate out all of your spendings.  Sort everything you spend money on into categories groceries, restaurants, entertainment, gas, and anything else you can put into a category.  Examine how much you are spending in each category and think about how you can cut back on your spending.  It will be an eye-opening experience to learn how much you are spending on some things without realizing it cost you a lot of money.

Once you’ve determined what to cut back on keep tracking your spending and decide how much of your savings you want to spend on your rent.

30 percent rule
The generally accepted rule of how much of your income should go towards rent is 30 percent.   It today’s rental market that rule may be a little bit outdated, but it is a great starting point.   Take a look at how much you currently make and then subtract 70 percent to leave you with the ideal number you should be spending on rent.  If this number is higher than the average rental prices in your area, you should have no issues finding the ideal rental.

Remember additional costs
Far too often people forget that you may need to buy some extra things for your new place.   Sometimes you’ll want to get a new chair or couch. Maybe you’ll need a blender.  There is any number of household items and furnishings you may want to buy once you move into a new place.  When doing a tour of the apartment keep these things in mind and consider them when you start comparing apartments to rent.

The bottom line here is that you need to set yourself up for success when figuring out how much rent can afford.  For those of you not interested in just renting you may want to consider looking into a lease purchase home which allows you rent a home for a set period and then purchase that home when the lease expires.