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Average monthly household expenses12/12/2023 ![]() If 30% of your Gross Pay is less than your monthly rent, many financial professionals would suggest that you find a more affordable home or increase your income. ![]() If 30% of your Gross Pay is more than you're currently paying each month in rent, then you may be at a more comfortable level for housing. If you receive a paycheck twice a month: Multiply your Gross Pay by 2 (to see your monthly Gross Pay). If you receive a paycheck every two weeks: Multiply your Gross Pay by 26 (to see your 52-week Gross Pay) then divide that number by 12 (to see your monthly Gross Pay). To find your gross monthly income, take a look at your most recent paycheck and find the line calling out “Gross Pay” (what you're paid before taxes, health insurance, 401k, and any other benefits are removed from your pay). How to calculate 30% of your available income for rent To maintain a balance in your monthly budget, find ways to decrease your spending in other areas to live comfortably or find other areas to live in for less. If you live in an expensive area, you may have to spend more than 30% of your monthly income on rent. If you'd rather live in a more spacious apartment or more appealing neighborhood, cutting back on these extras can help you afford your new space. If you frequently eat out at restaurants, spend money on entertainment, or travel, consider how these expenses affect your monthly budget. While finding a cheaper place to live can help you afford all of your essentials, consider reviewing and trying to reduce your expenses so you can put your money toward student loans and other debt. When you have considerable debt to pay each month, putting 30% of your income toward rent may still be too much. If your rent pushes above 30% of your gross income, by limiting your monthly bills, you may be able to keep rent + bills less than 50%. The rule entails spending 50% of your monthly income on essential expenses such as rent, monthly bills, and groceries, spending 30% on non-essential purchases such as going out to eat, and putting 20% into your savings account. ![]() The 50/30/20 rule is a popular method to follow when determining your expenses in your monthly budget. When determining how much you can reasonably pay in rent per month, there are some other things to consider before you say no. The 30% rule does not always perfectly align with your budget. Make sure that your monthly rent payments don’t prevent you from paying off credit card debt or loans: your rent shouldn’t cause you to fall deeper in debt. ![]() If you have to spend over 30% per month on rent, you'll have less money left over for bills and important purchases, making it more difficult to build savings. Why you shouldn’t spend over 30% of your income on rent For instance, if you have credit card debt or student loans to pay off, consider finding an apartment with rent below 30% of your monthly income, so you can put more of your budget toward reducing your debt. The 30% rule is a general guideline that renters can follow, but they should also take into account other expenses and factors. This has been a rule of thumb since 1981, when the government found that people who spent over 30% of their income on housing were "cost-burdened." Under 30% What should your rent to income ratio be? The 30% ruleĪ popular standard for budgeting rent is to follow the 30% rule, where you spend a maximum of 30% of your monthly income before taxes (your gross income) on your rent. Here’s how you can figure out how much of your income should go toward your monthly rent. Ideally, your monthly rent payments should leave you with enough money left over for bills, groceries, a bit of non-essential spending, and even savings.
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