When it comes time to renting an apartment, you may be wondering how much you can afford in monthly rent payments. Figuring out your monthly budget is critical to finding the place to live that is right for you.
Calculating Your Monthly Rental Budget
Your monthly rental budget can be calculated by figuring out what 30% of your monthly income is. To get this number, take 30% of your yearly income, and then divide that number by 12 (for the 12 months in a year). Or, the easiest way to do this is to take your yearly income and divide it by 40.
So, for example, if Fred makes $40,000 a year:
40,000 ÷ 40 = 1,000
With a $40,000 annual salary, Fred can afford a maximum of $1,000/month in rent.
But hold on! What about taxes and other witholdings on your paycheck? These factors need to be taken into consideration when calculating your rent. Sure, you may get a tax refund at the end of the year, but that doesn’t help you pay your rent throughout the year.
Let’s go back to Fred for a second. Let’s say, after taxes, Fred’s take-home pay is about $31,000/year.
31,000 ÷ 40 = 775
Although Fred’s annual income is $40,000, he can actually only truly afford a monthly rental payment of about $775.
Other Factors to Consider
Are you moving in with a roommate or significant other? If so, keep this in mind when looking for an apartment. Not only will you need more space, but together you will be able to afford a higher monthly rent, something to consider when looking at the floor plans available.
Once this is determined, it may seem like you will have a lot left over each month after your rent is paid, but don’t forget to think about your other bills and living expenses!
- Car payments
- Car insurance
- Gas/electric/other utilities
- Cable/Internet (Included at Stonegate!)
- Gym membership (Included at Stonegate!)
- Extra expenses
Some rental agreements include these types of expenses, such as cable/internet or utilities. At Stonegate, we offer the following apartment amenities which are included into the monthly rent; basic cable with turbo internet, trash removal, state-of-the-art fitness center, and outdoor lawn maintenance/snow removal!
You want to make sure that after all rent, bills, and other necessary payments are taken care of, you still have some money left over to save. Keep this all in mind when you’re searching for your next apartment at Stonegate. Happy renting!