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.
