Milvionne Chery Copeland, Writer
@milvionne_copeland
You can afford a maximum of $2,500 a month for rent with an income of $100k per year. This is based on the rule of thumb that you should not spend more than 30% of your gross monthly income on rent. Limiting your monthly rent to 30% of your monthly income leaves room for you to afford other expenses and save for the future.
How to Calculate How Much Rent You Can Afford
To calculate the amount you can afford to spend on rent making $1,00,000 a year, divide 1,00,000 by 12 to get your monthly income. Then multiply your monthly income by 0.3, to calculate 30% of your income.
Monthly income: $1,00,000/12 = $8,333
Maximum monthly rent: $8,333 x 0.3 = $2,500
Typically, the higher your salary is, the more you can afford to pay for rent. The table below demonstrates how much rent affordability changes with different salaries.
Maximum Rent by Salary
| Gross Annual Salary | Monthly Rent |
| $30,000 | $750 |
| $40,000 | $1,000 |
| $50,000 | $1,250 |
| $60,000 | $1,500 |
| $70,000 | $1,750 |
| $80,000 | $2,000 |
| $90,000 | $2,250 |
| $100,000 | $2,500 |
Additional Factors That Affect How Much Rent You Can Afford
Even though you can afford to pay up to $2,500 a month for rent based solely on your income, that doesn’t mean you should ultimately spend so much. Other factors, such as your debt and your other expenses, also play a major role in determining how much rent you can afford to pay.
- Debt: You may decide to spend less than $2,500 a month on rent if you have a lot of debt. That way, you can have more money to pay down your debt. Prioritizing paying off your debt saves you money in the long run and can make it easier to buy your own home.
- Living expenses: The more money you spend on things such as food, gas, child care, and insurance, the less money you will have available to pay for rent.
- Financial goals: If you want to prioritize buying a house or building an emergency fund, for example, 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
Get a roommate. By getting a roommate or multiple roommates, you can split the cost of rent and lower the amount you pay. You can also lower the cost of utilities by splitting the bills with someone else.
Sign a longer lease. If you opt for a longer lease, your landlord may offer you a discount since they can count on having the unit rented for a long period of time.
Negotiate lease renewal. When your lease is up for renewal, your landlord may decide to increase your rent. If you’ve been a good tenant who has always paid rent on time, try to negotiate to keep your rent at the same rate.
Move to a cheaper neighborhood. Different areas may charge different rates for apartments. That’s why you should compare rent prices for different neighborhoods in your area to find the best deal for you.
For more information, check out WalletHub’s guide on how much to spend on rent.
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