If you’re shopping for a new apartment, one of the main things to consider is how much rent you can afford. Typically, you’ll want to keep your rent at roughly 30 percent or less of your gross income. However, here are some other factors to consider.
Keep in mind that rent is a fixed expense that impacts your other savings, like the amount you’re putting away for retirement. The more you spend on rent now, the less you’ll have to save for retirement as well as emergencies and your other goals. If you’re young, you have more time to save for retirement. However, keep the big picture in mind. Don’t go for a rent price tag that seriously hinders your ability to save.
If you want to one day own a home, cutting back on rent now is a good way to make it happen. By reducing your rent, you can add more savings to your house fund. Typically, owning a home is cheaper in the long run than renting an apartment (though it varies by location). You’ll also eventually gain an asset in the form of a debt-free home. Save money on rent now, so that you can own a home later.
As US News reports, one way of looking at rent is under the discretionary spending category. If you like dining out and spending a lot on entertainment, you should factor that into how much you spend on rent. If you’re shelling out so much for rent that you can’t afford the lifestyle you enjoy, you’ll likely regret it.