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Are You Spending Too Much on Rent?

Updated on August 31, 2015

Determining whether or not you’re spending too much on rent is going to come down to the income you’re bringing in on a monthly basis. While it is generally recommended to spend no more than 20-25% of your monthly income on rent expenses, there are a few factors to consider that may cause that percentage to rise into the 30-35% range.

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For example, let's say the average cost of rent in your city in 2014 was $925/mo. Using 25% as a benchmark, you would need to be bringing in approximately $3700/mo in order to follow the recommended guidelines. An annual salary under $45,000 may not be practical for many potential renters, meaning the percentage of your monthly budget spent on housing may have to be raised to accommodate available options.

Let’s take a look at some of the questions, provided by a Greensboro moving company, you should be asking yourself in order to determine whether you’re spending too much:

What Are You Looking for in an Apartment?

If you’re a busy professional who isn’t going to be spending much time at home, then it may not be necessary to rent a higher end apartment. If, however, you’re a family that plans on raising children in your home or spending a majority of your time there, then renting a quality apartment or house is probably going to be a mandatory decision.

Deciding on exactly what type of place you’re looking for is going to be the first step in finding out whether you’re spending too much. If you’re looking for luxury, you’re obviously going to be paying more than an apartment that is meant to serve as little more than a resting place. Many apartment buildings offer furnished apartments complete with fireplaces, plasma TVs, and an in house mail service. You’ve got to decide for yourself whether these extra amenities are worth an extra few hundred dollars or more a month.

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Is it an Optimal Location?

The major factor associated with the price of a rental is going to be its location. As would be expected, a place in a safe location that is in close proximity to potential jobs, schools, restaurants and/or shopping areas is going to demand a higher price than one that lacks convenience.

If location is a big deal for you then you should probably expect to pay a premium. If, however, optimal location isn’t really necessary, you can expect to pay much less. You’ll also want to think about the proximity to your job, as fuel costs and time saved should factor in. How much is it worth to you to shave an extra 30-40 minutes off your work commute?

Things to Check Before Moving Into an Apartment

Conclusion

As a rule of thumb, if you’re spending more than 30-35% of your monthly income on rent and utilities then, yes, you are paying too much. One exception would be for professionals who work from home, in which case the money that they save on fuel costs could be added to that percentage.

At the end of the day, whether or not you’re paying too much is going to come down to the importance you place on the amenities available at different rental properties. You’ve got to decide what your own personal priorities and needs are. Use the recommended percentages provided as a benchmark, but be sure that you’re focusing first and foremost on your own personal convenience and needs.

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