Milvionne Chery Copeland, Writer
@milvionne_copeland
You can afford to spend up to 30% of your gross income on rent, according to most financial experts, which means you can afford up to $816 a month for rent if you are making $17 an hour and working 40 hours a week. Limiting your rent to 30% of your income helps ensure you have enough funds to pay your other bills. It also gives you room to save money for the future.
How to Calculate How Much Rent You Can Afford
To calculate the amount you can afford to spend on rent while making $17 an hour, multiply 17 by the number of hours you work in a month. If you work 40 hours a week, for example, your gross monthly income (the amount of your paycheck before taxes are taken out) will be $2,720. Then you multiply your monthly income by 0.3 (to calculate 30% of your income).
Monthly income: $2,720
$2,720 x 0.3: $816
Even though you should be able to afford up to $816 per month for rent based solely on your income, that doesn’t mean you should actually spend the full amount. You should also consider other factors, such as your debt and your other expenses, to figure out exactly how much rent you can afford.
Additional Factors to Consider
- Debt: If you have a lot of debt, you may decide to spend less than $816 a month on rent so you can use more of your income to pay off what you owe.
- Living expenses: The more you have to spend on things such as food, gas, and child care, the less money you will have to pay for rent.
- Financial goals: If you want to buy a house or start a business, you may decide to spend less on rent so you can have more money to allocate to these goals.
How to Save Money on Rent
Sign a longer lease. Since landlords can count on having the unit rented for a long period of time, you may be able to get a discount if you sign an 18-month lease instead of a six-month or one-year lease, for example.
Split rent with a roommate. By getting a roommate or multiple roommates, you can lower your share of the rent and utilities.
Consider a different neighborhood. Rents on one side of town may be far lower than in other areas, so it’s a good idea to compare prices for different neighborhoods in your area to find the best deal for you.
Negotiate lease renewal. Your landlord may want to increase your rent when your lease is up for renewal. If you’ve been a good tenant who has always paid rent on time, you may be able to negotiate with your landlord to keep your rent the same.
For more information, check out WalletHub’s guide on how much to spend on rent.
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