Spending money is a terrible issue for many of us. However, it turns out that being alive may be pretty costly (the battle is real), but if you create a budget for how much you should spend on rent and avoid living above your means, you and your bank account will come out ahead. Let’s look at the many options and strategies for building a rental budget so you don’t overpay on rent again.
HOW MUCH RENTAL CAN YOU AFFORD?
When it comes to renting an apartment in Houston, this is the most crucial question to ask. Many tenants place a premium on price, especially if they are on a tight budget. It’ll most likely be what keeps you from moving into one apartment and tempts you to go into another. Examining your lifestyle is one of the most important elements in determining how much you can pay on rent.
If you like staying in on weeknights and binge-watching Netflix (you’re not alone), you may want to increase your housing budget. If you spend most of your time at work, with friends, or at your significant other’s apartment, and all you need is a place to wash and sleep, you may want to keep your budget low to save money for other things.
Because the amount of rent you can pay is determined by your income, you’ll need a method to calculate your budget based on that, and luckily for you, there are several rules of thumb to consider. Consider the 30% barrier and the 50/30/20 budget while creating your budget.
What is the 30% Cutoff Point?
The 30 percent rule, a tried-and-true guideline, states that you should spend about 30% of your total income on rent. If you earn $40,000 per year, multiply that by 30%, or 0.3, to find out how much you may spend on rent each year. Subtract 12 from that number (12,000). (months). If you complete this math correctly, you’ll arrive at your chosen monthly rent budget of $1,000.
Consider the scenario above, and suppose that you spend the most of your time cuddled up in your apartment rewatching old comedies. If you want your house to feel as comfortable and handy as possible, including updated features, community facilities, and safety features, you should budget 30-35 percent of your salary for rent (if you think it’s worth it).
If you’re often on the road, though, you might want to save up for those travel adventures and evenings out by spending as little as 15-20% of your salary on rent. It all depends on your way of living. Though this rule of thumb is a good one to follow, it all depends on how much time you want to devote to your family.
What is the 50/30/20 spending plan?
If you believe you need to create a budget for everything in your life (not just rent), I recommend the 50/30/20 budget.
The following is the breakdown: 50 percent of your money is spent on necessities. Rent, extra fees, utilities, phone bill, insurance (renter’s, auto, health), transportation (gas, public transportation, car payment), and food are all included. The remaining 30% of your income is set aside for non-essentials and leisure, such as movies, concerts, retail shopping, and dining out. The remaining 20% of your income (or more if you’re a saver rather than a spender) should go into your retirement and savings account in the hopes of a worry-free future. Although stress-free isn’t a realistic goal, we’ll settle with stress-less. Not a single word? It is now.
You’re starting to understand the big picture now, right? The 50/30/20 budget makes things a bit simpler for you. Let’s talk about some of those basics, such as extra fees and utilities, now that you’ve seen what 50% of your money goes for (the essentials). These will have to be factored into your move-in fees as well as your monthly rent.
MOVE-IN FEES: WHAT ARE THEY AND HOW MUCH DO THEY COST?
It’s thrilling to move into a new apartment, but it’ll cost you money. Remember that when it comes to moving into a new apartment, the cost is the most significant factor for many of us. You’ll need to factor move-in costs into your apartment budget when you move in.
Move-in fees are one-time payments made before or on the day of your move-in; they are not added to your monthly rent. However, you will need to budget for these expenditures to ensure that you have enough money set up so that you can receive your apartment keys on time.
The following items are included in the move-in fee:
- Fees for application and administration
- A security deposit is required.
- Rent for the First Month
- Fees and Deposits for Pets
An application fee, an administration charge, and a security deposit are all required.
The application cost and administration fee vary by apartment complex, however they can range from $50 to $400. These are two distinct fees. The amount of a security deposit you must pay is determined by the apartment as well as the results of your background and credit checks. If you have a solid rental history and satisfy the other requirements, a security deposit can be as high as one month’s rent or as low as $100. The best thing is that it’s refundable as long as it’s not spent to repair any damage you do to the unit.
Rent for the first month
You may be required to pay a prorated rent, which accounts for the portion of the month you will be living in the apartment, depending on property management. Other complexes, on the other hand, will charge you a full month’s rent, or even the first and last months’ rent. To be sure you’re both on the same page, ask the landlord or property management about the specifics.
Fees or deposits for pets
If you want to keep a pets in the apartment, you will almost certainly be required to pay a pet fee or pet deposit (you can get some or all of a deposit back, while a fee is non-refundable). It’s also worth noting that some housing communities have breed and size limits. Two pets per apartment is usually the norm, and it is carefully enforced. The apartment may also charge monthly pet rent in addition to a pet fee or deposit, so you’ll need to factor that into your budget as well.
HOW MUCH DO UTILITIES COST ON A MONTHLY BASIS?
What else should you factor into your rental budget, you might wonder? Utilities! Utilities are monthly fees that cover the following items:
- Electricity
- Trash
- Water/Sewer
- Cable
- Internet
- Pest Control
If your utilities are included in your rent or if you are charged separately by the provider, either at a flat rate or based on usage, how much they cost and how you pay for them is determined by whether they are included in your rent or if they are charged separately by the provider, either at a flat rate or based on usage.
It’s possible that it’s a combination of the two. For example, your apartment complex may charge a monthly flat fee for water, garbage, sewage, and pest management, which is automatically added to your rent. Assume the total is $80 each month. You must, however, remember to pay your water, electricity, and internet/cable suppliers. They will bill you on a monthly basis based on your consumption (or a flat rate, depending on the provider).
Before you sign the lease, make sure to inquire about how the property management or landlord handles and divides utilities (keyword here: before). If you don’t have an approximate figure for how much you’ll be spending for utilities each month, you could wind up paying more than you expected, causing your total monthly rent (rent plus utilities) to exceed your rental budget. Renters, that’s exactly what we’re trying to prevent!
HOW TO ESTABLISH A RENT BUDGET
We need to have your budget in order and ask the property management or landlord all of the correct questions if we want to prevent that unpleasant outcome. So, where do we begin?
So, figure out your lifestyle, which includes how much time you expect to spend at home, having fun in Houston, and at the apartment complex. This will help you figure out what types of facilities and features you’re willing to pay for, and then you can figure out what percentage of your salary works best for you – anything from 10% to 35%. But keep in mind that you should not live over your means. You want to be able to set aside 20% of your income for retirement and the remainder in a separate savings account for large expenditures or emergencies (follow the 50/30/20 guideline).
How do you figure out how much rent you’ll have to pay in total?
Calculate the proportion of your income that you plan to spend on rent. If your rate is set at 28 percent and you earn $45,000 per year, your monthly rent budget will be $1,050. However, that figure should cover both your base rent and your utilities (gas, water, etc.). But hold on! That’s not all, though.
Monthly pet rent, renter’s insurance, extra storage costs, and garage or covered parking fees are all things to consider. While these costs are dependent on use and are not required for all residents, you must factor them into your budget if they apply to you.
Assume that your monthly utility and other expenses total $150. That implies you shouldn’t spend more than $900 per month on basic rent. Voila! You’ve reached your rent ceiling. You may use this money to get a studio or one-bedroom apartment, or you can combine it with another person’s budget to get a bigger property!
REMAINING CONSISTENT WITH YOUR FINAL BUDGET
You should have a final budget for your move-in fees, monthly rent, utilities bills, and other fees after applying the 30% threshold and the 50/30/20 guideline to your particular income and personal situation. Your final budget should be fixed in stone for the duration of your lease once you’ve paid your move-in costs and are living in the property.
However, be aware that when your lease expires, you may be charged an extra fee or face a rent rise. Good luck with your budgeting, my fellow tenants!