Budgeting is a tricky task. You want to make sure that you have enough money for the rental, bills, furniture, and enough to save for unexpected costs. Although, how do you know how much you should allocate? Our guide shares how to budget for your rental:
Use the 30% Rule:
Many sources state that your rental should only take up 30% of your annual income or monthly housing allowance. This will allow you to pay for other bills and to save for those unexpected costs. Example: If you make $30,000 a year, your rental price yearly should only be 9,000. This would be about $750.00 a month for rent.
Find a Roommate:
This is a great tip for those who are not able to afford an apartment on their own or are in school. This way, you can evenly divide the rent between multiple people and end up saving lots of money. If you would like to see how the 30% rule would work in a roommate situation, add up the annual income of your roommate(s) and yourself. Then take 30% of that and you will get a yearly rental price. Again, divide that by 12 and you will get a suggested monthly rent.
Assess Added Costs:
Costs of living on your own not only include rent and bills, but also groceries and supplies. If you are currently living with your family, and they do the primary household purchasing, for a month, purchase all of the items you will need. This will give you a more accurate amount of added costs that you will be spending per month.
Speak to Potential Neighbors:
Ask potential neighbors on average how much they spend on their cable, water, electricity, and other bills. Some rental properties have specific providers; make sure to ask the property manager who those are and added costs that may be associated with the property. Examples of this could be trash bills, utilities, common area fees, and storage lockers.
Accrue Money in a Saving Account:
SAVE, SAVE, SAVE. There are always unexpected costs in renting or purchasing a home especially if you have not done so before. Place as much money in your savings account now, can help with the security deposit, first couple months of rent, and more.