"How much rent can I afford?" It's a balance of financial goals and personal boundaries.
Essentially, what you pay in rent is the product of your income and your preferences.
The traditional answer to the question about how much to spend on rent is "no more than one third of your take home pay." To us, that's completely arbitrary. What if you have a baby? What if you have lots of student loans? What if you absolutely don't want to live with roommates? There's no way that a blanket statement makes sense for everyone.
It's all about balance!
Start by listing your financial goals and personal boundaries.
Heads up! You may find that these two interests contradict one another — for example, if you want to maximize savings, but you can't live with roommates. Getting firm on your priorities will help you feel more confident in the rent budget you determine.
Typically, financial goals boil down to a target amount of monthly savings. Let's take a look at Boston as an example, since it's the city I know best in terms of monthly costs. Let's say you're making $50,000/year in Boston — that's about $4,200/month gross income. Now we'll subtract all other costs (excluding rent):
- Taxes, FICA, health insurance, etc. (~35%): $2,700
- Student loans (~$300): $2,400
- Gas (for car), subway, bus, etc. ($100): $2,300
- Groceries ($400): $1,900
- Utilities ($50): $1,850
- Internet/Cable ($75): $1,775
So, the rough amount of disposable income someone earning $50,000/year in Boston has after primary expenditures is around $1,800/month — and that doesn't include entertainment, nightlife, vacations, etc.
In a city like Boston, if this person wants to save any money at all, it's almost a certainty that they'll need to live with roommates — the average price for a 1-bedroom apartment is just about $1,800.
That's because there are no cheap apartments in Boston. In fact, having roommates can save you between 25-53% on your housing costs! We can help you navigate the roommate search in Boston with this article on finding roommates in Boston.
In the context of renting an apartment, personal boundaries basically breaks down into three categories: roommates, location, and space.
It's completely fair to have strict rules about your personal space. As such, there are some good questions to ask yourself about personal boundaries that will help inform where your next apartment will be and who you'll be living with (if anyone):
- Am I comfortable living with one other person? More than one?
- Am I comfortable handling a long commute on public transportation every day?
- Am I comfortable living in a quiter neighborhood that's away from the action?
- Am I comfortable living in a smaller space?
- Am I comfortable living in an apartment that doesn't allow pets?
Full disclosure, these questions are geared more towards someone who's trying to maximize their savings every month, but I figure most people fall into that category. If your goal is to save as much as possible, you can honestly cut your housing costs by 60-70% by living with 3 roommates in Medford versus trying to live by yourself close to Downtown Boston.
But again, it's all a balance!
And when you're looking for an apartment, decide whether you can afford to pay a broker’s fee or not.
For context, working with a broker in Boston — and brokers represent about 80% of available apartments in the city — typically costs one month's rent. It's definitely possible to find no fee apartments in Boston, but it's a lot harder and your options are limited, which can be stressful for some people who prefer having a bit more choice.
And feel free to read more why Boston has rental agents, brokers and fees and how that whole system works.