So really, this rule was derived from what was, rather than what should be, and it ballooned from there. Not to mention all the other things which pop up because life is messy. What about medical bills? What about a new laptop because your backpack broke and yours fell into a puddle? For real. You could if you wanted to. It might be more important to young professionals with active social lives to live closer to the city, while for young families it might be more important to live somewhere they can have a garden, and be close to good schools.
Some people might be happy to share a room with another person to live closer to the city. Other people be okay with sharing an apartment or house, but not a room. For other people again, it might be of the utmost importance to have their own space. Considering where to live necessarily involves taking all these factors into account, and balancing them against what you need and want, as well as your other expenses. Of course, you should live within your means, and your financial health is important.
If you own and use a car and also use public transportation, include both. You must account for debt payments, such as student loans and revolving credit card debt, as part of your budget.
Keep in mind that the more you can pay, especially on revolving credit, the faster the balance will come down. Renter's insurance protects your personal belongings from loss or theft and provides liability protection in the event you are sued because someone is injured on or in the property you rent. These protections are not provided by your landlord. Contributions to a company-sponsored k or retirement plan will be deducted before you are paid and do not have to be counted. Any savings that come out of your take-home pay, however, do.
Clothing, dining out, gym membership, and hobbies are just a few things that fall under this miscellaneous or discretionary-spending category. Subtract your monthly budget total from your monthly take-home pay, and the amount left is the most you should pay for rent—what you can realistically afford. If the amount is too small for available apartments in your area, take a hard look at your discretionary spending first and other categories as needed. You may also need to weigh the options of moving to a less expensive locale or sharing an apartment with roommates.
Apartment search sites, such as apartments. You may want to check out these sites before you create your budget, just to get an idea of what your goal needs to be. One important final factor has to do with your personal priorities. If investing for retirement is a high priority—or saving up for a new car or travel is important—you may want to scale down your expectations for a place to live and put more funds into what matters to you more.
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Before you start scanning Craigslist and Zillow for rental options, determine how much you can truly afford to pay for rent. Here are a few ways to figure that out. If you have a lot of expenses that fall under the needs category, your budget for rent could be pretty tight. Consider this example:. Where you live affects everything from your commute to your workout routine. Factor in additional costs or savings you might incur depending on your rental choice. Living further from the city center, for example, is often less expensive.
But you could spend hundreds each month on transportation costs to commute to and from work and social engagements. According to consumer. If your budget is slightly out of reach for your dream apartment, try to nix unnecessary costs to see if you can make it work. Look for ways to cut down on utilities, insurance, groceries, and rent. Cut the cord on TV and mobile services that may not serve you and your budget anymore.
Consider swapping out your light bulbs for eco-friendly and energy-efficient light bulbs to cut down your electric bill. Insurance : Instead of paying monthly renters insurance rates, save a fraction of the cost by paying your yearly cost in full. If you have a roommate, ask to share a policy together at a premium rate. Groceries : Swap your nights out for a homemade meal. By simply cooking one meal at home every week on a night you would normally go to a restaurant, you can end up saving huge amounts of money in the long-term.
Just create a budget for groceries at the start of each month and add up costs when grocery shopping to ensure your spending stays on track. Rent : One of the best ways to save on rent is to split the bill. Consider getting roommates to save 50 percent or more on your monthly rent.
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