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How Much You Should Pay for Rent Based on Your Income and Expenses

April 19, 2019

If you’re looking for a place to rent, this question is probably foremost in your mind. That is just as it should be! You work hard to earn your money, and you want to make sure you are spending it in the smartest way you can. We’ve put together a general guide on how much you should pay for rent based on your income and expenses.

Calculate Your After-Tax Income

This is the first step you must take, before you can figure anything else out. Your total salary is not the amount you will take home. If you don’t know what your take-home pay is, check your pay stubs – you will find the correct number there. There are a number of facts and figures that have been suggested as an answer to the question of how much rent you should pay based on your income. Here are a couple of the most popular:

The 30% Rule

Many experts recommend that you should not use more than 30% of your after-tax income to pay for housing expenses – often this number includes utilities along with rent. In fact, some apartment complexes will require you to earn 3 times the rent in order to live there. Be sure to ask about this when inquiring about a potential rental, since it is important information to know not only what you can afford, but also if you qualify to live somewhere.

Additional Expenses

Don’t forget to consider additional expenses such as credit cards, car and phone payments, student or other loans, and basic necessities. In fact, there is another rule that takes these items into consideration. That is the 50/30/20 rule.

The 50/30/20 Rule

Another popular rule states that 50% of your take-home pay should go towards necessities or fixed costs such as rent, car payments, and other bills. Next, you should limit your variable costs such as groceries, entertainment, and shopping to 30% of your income. The rule suggests the remaining 20% of your income go into savings.

Consider Combined Incomes

If you have a partner or spouse to live with, you may have greater options due to your combined incomes. If you are not partnered or married, consider looking for a roommate to live with. This will reduce the cost of rent and open up your options.

Choose a Location Wisely

In Middle Tennessee, just like any area, there is a varied cost of living across different cities. Thankfully, the areas where MMC has rentals have a lower cost of living than the major metropolitan area of Nashville. Our properties in Murfreesboro, Smyrna, La Vergne and Southeast Nashville are affordable and comfortable. Check out our communities to get started today!