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How much of your paycheck should you spend on rent?

Regardless of the economy, it's always a good idea to budget your money. Creating a balanced budget includes managing your monthly expenditures and your income from each paycheck. Rent is the leading cost the list of personal expenses. How much should you spend on rent? It's not always a simple calculation and there are a number of factors to keep in mind when estimate how much you should budget from your paycheck.

The Percentage

When understanding how much you should spend on rent in relation to your paycheck, most financial advisers and budget calculators agree on approximately the same percentage. Your rent should be approximately 30 per cent of your take-home pay. Roughly one-third of your income funds your apartment. Whether you live in a penthouse or studio flat, your rent will affect how much you spend each month for housing.

Calculate Your Income

If you are paid weekly, multiply your take-home pay by 52 and divide by 12 to get your monthly income. If you're paid every other week, multiply by 26 and divide by 12 to arrive at that answer. Add any other monthly income you have (i.e. spouse's income or other sources). Divide the amount of the rent by your monthly income and multiply by 100 to get your rent as a percentage of your total income.

What About Utilities?

Sometimes rental properties include the cost of utilities. These primarily include electric, heat and air conditioning (if they are not electric), water and garbage. Financial advisers generally include these costs in the 30 per cent budget for rent. If you pay extra for utilities, you should determine how much they'll cost and include that amount in your calculations when you budget your paychecks.

The Numbers

Although 30 per cent is the accepted percentage of income for rent, total income skews that number. In reality, the more modest your income, the higher a percentage you will pay for housing. For example, if your monthly income is £650, you shouldn't be paying more than £195 for rent and utilities. Depending on where you live, finding a suitable apartment for that price may be impossible. Conversely, those with very high incomes tend to pay a lower overall percentage on rent.


Where you live is the biggest single factor in the cost of rent. What you pay for a studio flat in Manhattan will probably get you a luxurious, multi-room penthouse in Peoria. Additionally, every area has its desirable and less desirable neighbourhoods. Your location of choice is tied to a number of variables -- namely job, family and personal preference. The latter is often overridden by the first two.

The Accommodations

Intertwined with your city choice are the accommodations themselves. Regardless of which city or neighbourhood you choose, the facility itself plays a large role in the cost of the rent. Is it a multi-unit complex with a lot of amenities or an old home converted into a few apartments? Is it clean and well-kept? Is there an on-site manager or supervisor? The size of the unit factors into the rent as well. Obviously, a studio flat or one-bedroom apartment will cost less than a larger unit even if they're in the same complex.

About the Author

Ann Deiterich has been a writer since 1984 in business-to-business communications, specializing in TQM, business/financial topics, office management and production efficiency. As an environmental proponent, nature and science are her areas of interest. Deiterich holds a Bachelor of Arts in English from Albright college and has three expert rating certifications including Grammar, Words/Phrases and Advertising Skills.

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