If you know where you want to live and you’re ready to do some apartment hunting, but you aren’t entirely sure about what you can afford, this post will help you out.
Figuring out your budget based on salary is a bit different from figuring it out based on hourly pay. There are two ways to calculate your monthly budget whether you’re paid hourly or salary. Both formulas factor in the general rule of thumb about spending no more than 30% of your income on housing.
If you’re salary, you can simply divide your yearly gross income (your overall yearly pay before taxes or other deductions) by 40. So if you make $50,000 a year, divide that by 40, and you’ll get $1250, which is what you can afford monthly in rent alone.
If you receive hourly pay, the calculation is a little trickier; you’ll need to take into account both the number of hours you work each week and your hourly pay. You’ll want to use the following formula: (Hours worked per week x hourly pay x 4) / 3.2 = monthly rent. (Note that this formula is based on a 50-hour workweek instead of a 52-hour workweek, which gives you a bit of leeway.)
Keep in mind that the rent is only part of your budget. You will still have to pay for utilities and other things not included in your rent, such as water, electric, gas, trash/waste disposal, sewage, cable/internet, garage/parking fees, pet fees, renter’s insurance, and more. Also, some apartment communities might have a standard flat rate utility fee that they add on to your rent. For full clarification, simply ask apartment management about what the rent does and doesn’t include and how much each thing costs so there are no surprises when it comes time to make your payment.
You also need to take into account any personal expenses and debt that you have. This includes food/groceries, your cell phone bill, gym/club memberships, transportation expenses, car insurance and/or loans, health insurance, student loans, credit card bills, and more. Figure out what your personal expenses are each month, as that might also affect what you can pay per month in rent.
Typically, it’s suggested that you save a minimum of 3 times your target rent to cover that first month of rent along with the one-month security deposit, moving expenses and furniture. Do what you can to save money for all of the above and more if you can.
If you feel like you need help keeping track of your budget, there are several budget templates online that you can review and then decide on based on your financial needs.
If you’ve figured out your budget and are ready to look for your new apartment, then Myers Real Estate is here to help. We are realtors in Columbus, Ohio helping people find Columbus rentals. Visit us online or call us at 614-486-2933.