rent budget

Rent Budget: How Much Should I Spend?

When renting a property, or looking for your next prospective rental, a very important question to ask yourself is how much rent budget you can afford.

Spending too much of your monthly wage on rental payments could very easily leave you short when it comes to paying off other expenses. Expenses like debt, utility bills, or groceries. Not only this, paying too much rent on paying other expenses will hinder you from advancing your financial position.

Don’t get bogged down by paying too much rent. Make the right decision and find a rental that matches your monthly budget.


Let’s take a look at the most important things to keep in mind.

How Much Should I Budget For Rent?

A general rule of thumb is to pay no more than 30% of your monthly wage on rent. 20% is fantastic, 25% is great, and 30% is good but should be your limit. If you are spending any more than 30% on rent, something like 40%, you are putting yourself at risk of experiencing financial stress.

The 30% rule is commonly accepted by many financial institutes and landlords. When being assessed for rental properties, or a home loan, landlords and banks will use the 30% rule to determine whether you are a good fit.

For example, if your gross income for the month is $5,000 then your maximum rent budget should be around $1,500. 

What If I Can’t Meet The 30% Rule?

No biggy, there are ways to manage paying more than 30% of your income on rental costs:

  • Reduce the cost of your utilities. Being conscious of your electricity, water, and gas use can help reduce your monthly costs. Helping to leave more money to pay for rent. For example, a property with solar is likely to cost you less in electricity compared to those that don’t have solar on the roof.
  • Secure a rental property that is close to your workplace or has good public transport nearby. By doing so you will reduce your overall travel costs. Walking, riding, or taking the bus or train means you will spend less money on gas and car maintenance. Even better, you may not even require a car. Meaning no registration or insurance costs also.
  • Reduce your overall spending on luxuries. Lengthy vacations, streaming services, and eating out all quickly add up and can get very expensive. If you can reduce these costs your rent will become much more affordable.

How Can I Pay Less Rent?

There are several ways you can reduce the amount of rent you pay:

  • Let’s start with housemates. Sure, they can be a pain in the behind, but they are great for cutting your monthly rental costs. 
  • Negotiate the rental asking price. If you’re about to sign a new lease, ask your landlord for a slightly cheaper rental rate. You never know if you don’t ask.
  • Ask for a reduction in rent when resigning a lease. Landlords love good tenants and often will be happy to reduce the amount of rent if it means keeping them. So before signing on for another 6-months or year lease, ask them if they are happy to negotiate the price.
  • Another negotiation strategy is to ask if your landlord will cover one of your utility bills. Landlords sometimes are happy to pay your water bill, for example, rather than reduce the rental rate. 
  • Pay rent upfront. If you are happy to cover a chunk of rent all at once why not ask your landlord if they won’t offer a slight discount. 
  • If you are looking to rent an apartment and it comes with a parking spot that you don’t need, consider asking for a discount. If your landlord isn’t happy to do so, you always have the option of renting the parking space to someone else independently. I mean why not? It’s a bit of extra cash back into your pocket.

How Do I Know How Much I’m Spending?

There are a few ways to track your spendings and ensure you have enough money to pay rent, cover living costs, put away some savings, and still have a little leftover for yourself:

  • Track your account statements. By doing so you’ll soon be able to observe your spending habits. 
  • Categorize your expenses. Some credit, debit cards, or banking apps automatically do this for you, if not, take it upon yourself to see where your money is spent each month.
  • Use a budgeting app. Budgeting apps are a super-easy way to track your spendings. These types of apps will record where your money is being spent, allowing you to quickly jump on and check where your money is going.
  • Make an expenses spreadsheet. If you aren’t into apps or would prefer to arrange spending categories yourself, making an expenses spreadsheet will likely get the job done. Oh, and don’t despair. There are many free spreadsheet templates online for you to download if you don’t wish to make one yourself.
  • Identify room to change your spending habits. As you track your spendings, be open to making changes to your money handling habits. This is the biggest advantage of tracking your expenses, as you track your spendings it becomes very obvious which areas of your budget you could improve on.

Wrap Up

There are many ways to determine how much you should spend on your rent budget. And tracking your expenses is a great place to start, however, it can be a tough thing to do.

This is why, here at Emma, we have developed an app that will help make things super-easy. 

Emma’s features will assist you to

  • avoid any expensive overdrafts,
  • track your expenses,
  • analyze your debt-to-income ratio,
  • assist you in paying off any debt you may have accumulated,
  • maintain your invaluable credit score,
  • find any hidden bank fees,
  • track any interest you are accruing,
  • suggest ways to save,
  • and will send you push-notifications when you receive a refund, direct debit from another account, or your salary clears into your bank.

Emma is available for download on both the App Store and Google Play Store.

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