How Much Should I Spend on Rent?


March 30, 2021

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As your needs change throughout life (think second bedroom, home office, a small backyard for your new pup), you might find yourself wanting to move. And if extra room to spread out sounds intriguing right about now, it’s a perfect time to figure out how much rent you can comfortably afford.

One popular rule of thumb for figuring out how much you can afford to spend on rent is the 30% rule. Basically, it’s calculating 30% of your monthly income and that being your max rent payment. So, if you make $2600 gross every month, you could potentially afford to spend $780 on your share of the rent.

While the 30% rule is generally pretty reasonable, it doesn’t always fit in with the current reality of your life and financial situation. Depending on your salary and where you live, it might be impossible to only spend 30% on rent. The 30% rule also doesn’t factor in large student loans and other bills that might necessitate spending less than 30% on rent.

Need to spend more than 30%?

Like we mentioned above, sometimes you might find yourself paying more than 30% of your monthly income on rent simply because you don’t have a choice. Maybe you live in a city with a higher cost of living, or maybe your employment status changed. In this case, you might want to look at other ways of limiting your spending. Consider getting a roommate or short-term renter, moving to a different neighborhood (even if it’s just temporary!) or reducing what you’re spending on utilities and monthly streaming services.

What does it mean if you’re overspending on rent?

Spending more than you can comfortably afford on rent might be feasible for a little while, but it’s not something you want to make a permanent part of your budget. Sticking to the 30% rule (or a number that’s comfortable for you) will make it easier to establish a savings account and pay down debt. Rent will always be – by a wide margin – the largest single line item of a budget. Reducing it will only make it easier to budget for every other part of your life that’s important to you.

For tips on how to create a monthly budget that works for you, start with this spreadsheet, and check out our budgeting blogs.