Every year, there is a hike in rent. As a working class adult, I cannot tell you how many times I had moved to keep my rent at 25% of my monthly income. This is not my situation alone, but a common crisis with some working class young adults renting an apartment.
So, how much should you spend on rent?
According to Pbs.org, some Americans are paying at least 30% in rent and utilities. Four years ago, I was one of these young American adults. I paid 45 percent of my income for an apartment, so I could live less than a mile from my workplace.
Today, I figured a way to keep my rent at 25% of my income renting a nice one bedroom apartment with a living room and kitchen three miles away from the same workplace. What changed was not my income, but my savings goal. I thought it did not make sense giving up almost half of my paycheck to a leasing office every month.
It defeats the purpose of work for me. I felt like a peasant working for a bourgeois landlord. What made it worse for me, was how vulnerable I felt financially due to my little savings. So yeah- this article is personal.
How much should rent be is an article for any young working class adult trying to save money without dependents or children. You can do it without sacrificing the comfort of a nice apartment. I am doing it in the 7th largest city in the United States, where one can still get a nice one bedroom apartment for less than $1000 a month.
I will discuss how to go about keeping your monthly rent affordable as long as your city still has apartment rent less than $1000. For now, below is what percentage rent should be of your income.
What Percentage Of Monthly Income Should Go To Rent?
How much should one spend on rent, my good reader?
Personally, the percentage of your income that should go to rent should not be more than 30%. This is especially, when you are a young working class adult with no children or dependents. Keeping your rent under 30% of your income, ensures you have money to take care of life challenges as they come.
But, let us face reality. This is not always the case. How much income that goes to rent really depends on a number of factors. These include:
- Your monthly income
- The cost of living in your city
- Your personal goals
The higher our monthly income, the more choices we have. This includes being able to afford a luxury apartment. The same goes with low income, which makes us seek affordable rental properties. Either way, there are jobs out there which can help you afford an apartment. I discuss it on an episode #4 of my podcast- What Kind Of Jobs You Need To Get A Place Of Your Own.
Additionally, living a city with high cost of living could make rent expensive. Some good examples of such cities are New York, Boston, Miami or San Jose. Rent in these cities may be 50% or more of your monthly income. This is especially for young working class adults making a few dollars per hour above minimum wage.
On the whole, I just want you to consider your financial goal before renting an apartment. If your goal is to save money, then the percentage of your income that should go to rent should be less than 30%. This is when you live in a city where you can find apartments for less than $1000.
If you are a single adult like me with no children or dependents, I would say to try and keep it at 25% or less. This is because you can spend the other 50% in monthly expenses, while directing the remaining 25% into your savings account. At least, until we earn enough to afford luxury without breaking our savings accounts.
How Much Should You Pay On Rent By Salary?
How much should one spend on rent based on their income?
The less income you make, the more likely rent is going to eat deep into your monthly paycheck. With a high income, you will not feel the tug of your rent much.
Having mentioned that, here is a table I made to summarize how much rent you should spend on rent as a young working class adult. This is assuming you live in a city where you can find an apartment for less than $1200 a month as an adult with no dependents.
| Monthly Income after taxes | Rent |
|---|---|
| $25,000 to $30,000 | Less than 50% of income |
| $31,000 to $40,000 | Less than 50% of income |
| $41,000 to $50,000 | Less than 36% of income |
| $51,000 to $60,000 | Less than 30% of income |
| $61,000 to $70,000 | Less than 25% of income |
| $71,000 to $80,000 | Less than 21% of income |
| $81,000 to $90,000 | Less than 18% of income |
When you look at my table above, it seems the ratio of income to rent is higher for low income earners. This is because in American cities with high cost of living, rent could take a significant part of your paycheck. For example, in a city where is one bedroom apartment is $1000 and you make $2000 monthly, your rent is 50% of your income.
Does it make sense now?
The goal is to go for affordable rent, whenever the chance presents itself. It helps to consider having a roommate versus living alone before getting your own place. This is especially, when affordability in a high cost of living city means living in an apartment which does not have the comfort and safety you need in a home.
Now, affordability does not mean you are foregoing comfort. I am living in a nice apartment which meets my need of a comfortable and safe home. But, it is not a luxury apartment.
How Much Rent Can I Afford Making 60k A Year?
The rent for 60k salary should not be more than $1500 a month. This is about 30% of your monthly income. Unless you live in the outrageously expensive cities I mentioned early, keep that rent at 30% or less. It frees up more money for you to direct to your savings.
What if you want a luxury apartment?
If you already set up a sizable emergency fund, stretching that 30% will not hurt you. Personally, I do not like giving more than a quarter of my monthly check to someone for rent. But, that is just me.
I do not know about you or what your financial goals are, but I want you to have financial strength. Financial strength is having a lot of money in your savings account. Personally, it does not make sense to give up a big percentage of our monthly income as rent.
Hence, why I encourage going for affordable apartments to free up money to save and enjoy the fruits of your labor. How much you should spend on rent, depends on your city’s cost of living. As I mentioned earlier, go for less than 30% if your city has affordable apartments like mine. You will not regret it one bit!
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