How Much of My Income Should Go Toward Rent (2024)

Looking for a new place to live can be a stressful experience, and figuring out how much you should spend on rent can be one of the most challenging aspects of the process.

How much you can afford to pay for rent depends on how much you earn every month, your debt payments, other expenses and your future financial goals. Here's what to keep in mind as you search for a place to live.

How Much Rent Can You Afford?

There isn't a universal answer for how much of your income you should direct toward housing, but there are some rules of thumb you might employ.

Use the 30% Rule

The 30% rule states that you should try to spend no more than 30% of your gross monthly income on rent. So if your salary is $5,000 per month, your target rent payment would be $1,500 or less.

The idea is that if you're using 30% or less of your income on rent, you'll be able to afford to pay your day-to-day expenses and set aside money to meet your financial goals. The 30% rule isn't realistic for all budgets; you'll need to add up your expenses, consider your lifestyle and take other factors into account to determine whether this number makes sense.

Use the 50/30/20 Rule

Another popular budgeting method is based on the 50/30/20 rule. With this approach, 50% of your monthly income goes toward necessities (including rent), 20% goes toward debt payments and savings (including retirement) and the remaining 30% is set aside for discretionary and lifestyle-related expenses.

This strategy usually requires some calculations and tinkering. Start by totalling all of your typical monthly expenses and categorizing them. Because rent falls under necessary expenses, here's how you might determine what you can afford:

  1. Figure out what 50% of your monthly income is. For instance, if your take-home pay is $5,000, you can budget $2,500 per month for necessary expenses.
  2. Calculate the percentage of your income that you're currently spending on other necessities. Try to estimate new or changing expenses, such as utilities at your new place. Don't include existing rent payments.
  3. Subtract the total amount you're spending on other necessary expenses from your 50% figure. This number is what you can afford to pay in rent each month. So, if 50% of your monthly income is $2,500, and $700 goes to bills, you should aim for a rent payment of $1,800 or less.

Decide How Much You Can Afford

While rules of thumb can serve as a helpful starting point when making financial decisions, sticking to the math may not make sense in your individual situation. In some cases, you'll want to take a more holistic approach to budgeting for your new place. This includes when:

  • You're saving for a specific financial goal. If you have a major disruption to your budget coming up, such as going back to school or having a wedding, you may want more wiggle room in your budget. Don't aim to spend 30% of your budget on rent simply because you want to stick to the 30% rule. Reducing your rent to meet other financial goals could be the answer.
  • You're in an unsafe situation and need to move now. If you no longer feel safe where you are, you may need to exceed typical guidelines for rental costs, at least temporarily. While you'll need to be able to afford your new rent payments, spending slightly more to get to safety as soon as possible could be wise. Once you're moved out, you can take time to search for a more affordable housing situation.
  • Access to a unique location is important to you. Sometimes paying more to live somewhere special makes sense, especially if it's related to your job or helps improve your health. Downtown apartments are often more expensive, but if you find yourself happier, walking more, feeling healthier and spending less on transport costs, paying more can make sense.

Regardless of the approach you take, knowing the average cost of rent in your desired area can help you manage expectations. Estimating this alongside your fixed expenses can help you decide how much you actually want to pay for rent each month.

How to Save Money on Rent

Regardless of how much you can afford to spend on rent, it's a good idea to take some time to consider ways you can reduce your monthly costs:

  1. Move in with a roommate. Living with someone else isn't always ideal, but it can cut your rent expense in half every month, or even more if you're comfortable living with two or three people.
  2. Shop around. When searching for a place to rent, you'll typically find several options at various price points. Do your due diligence and shop around to make sure you get the most value out of your lease.
  3. Look for move-in specials. Some landlords may offer special promotions to encourage new tenants to move in. For example, you may be able to get some or all of the deposit requirements waived, or you could get a discount on your first month's rent. As you hunt for a new place to live, keep an eye out for these money-saving specials.
  4. Sign a longer lease. Landlords value stability, so you may be able to negotiate a lower monthly rent in exchange for a longer lease.
  5. Know when to move. Landlords have a tougher time finding new tenants during the winter, which means they may be more willing to give you a break on rent. In contrast, summer months come with high demand for rentals, so landlords may charge higher rents.

The Bottom Line

How much you spend on rent is only part of the story. How much you can afford to spend is the rest. If you're struggling to pay rent where you are now, you may face eviction if you're not careful.

Fortunately, there are some ways to get relief from rent costs. Reach out to your landlord or property manager to find out if they'll offer you some kind of break like forbearance or reduced rent. Many organizations are designed to help people who are having a hard time with rent payments. Tenant protection laws can vary based on where you live, but they can help you in certain situations.

Sometimes moving to a new, more affordable place may be the best option to help make your rent. It's common for a landlord to run a credit check when someone applies for a lease. To improve your odds of getting approved for an apartment, check your credit score to get an idea of where you stand and review your credit report to see where you can make some improvements.

Once you get into your new place, don't forget to see if your rent is eligible to add to Experian Boost®ø. By adding your rent to Experian Boost, you can get credit for one of your largest bills towards your credit report.

How Much of My Income Should Go Toward Rent (2024)


How Much of My Income Should Go Toward Rent? ›

One popular guideline is the 30% rent rule, which says to spend around 30% of your gross income on rent. So if you earn $3,200 per month before taxes, you could spend about $960 per month on rent. This is a solid guideline, but it's not one-size-fits-all advice.

How much of your income should go towards rent? ›

Experts we spoke to recommend keeping rent costs below 25% to 30% of your monthly income. More than that and you might not have enough left for your other daily needs or you might end up cutting into your savings.

Is the 30 rent rule realistic? ›

So, should the 30% Rule even be a general rule at all? The short answer: No. It is an antiquated financial benchmark, and the one-size fits all approach does not work for all.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

What percentage of your income should go to what? ›

50% of your net income should go towards living expenses and essentials (Needs), 20% of your net income should go towards debt reduction and savings (Debt Reduction and Savings), and 30% of your net income should go towards discretionary spending (Wants).

Is 50% of your income too much for rent? ›

Spending more than 50% of your income on rent isn't recommended, as you'll be living paycheck to paycheck. You won't be able to save or invest money for the future. If you're currently overspending on rent, solutions include raising your income, finding more affordable housing, or getting a place with a roommate.

How much does a 1 bedroom apartment cost per month in the USA? ›

The average cost of a one-bedroom in August 2022 is $1,769, a 39% increase from this time last year, according to's monthly report. Meanwhile, the nationwide average monthly cost for a two-bedroom rental in August is $2,105, a 38% increase from a year ago.

Is 30% too much for rent? ›

Is 30% of your income too much to spend on rent? Yes. You should spend no more than 25% of your monthly take-home pay on rent. Spending 30% or more will mean not having enough room left over in your budget to put toward other important financial goals like saving for a down payment on a home.

What is the 1 3 rule for housing? ›

The judge of CNBC's "Money Court" tells CNBC Make It that renters and buyers alike need to follow the 1/3 rule, which calls for a third of your after-tax income to go toward living expenses, a third toward your home and the last third toward savings and investments.

Is the 1% rent rule realistic? ›

Limitations of the 1% Rule

For example, if the median list price in a metro area is over $1 million, the 1% rule would necessitate rents of close to $10,000 per month. In this case, investors would forgo the 1% rule for a more realistic assessment of what makes a viable investment.

Is $4000 a good savings? ›

Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

How much should a 30 year old have saved? ›

Fidelity Investments recommends saving 1x your salary by 30. At the end of 2021, the average annual salary was $49,920 for 25 to 34-year-olds and $58,604 for 35 to 44-year-olds. So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards.

How to budget $5000 a month? ›

Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.

What is upper class salary? ›

Upper-middle class: $94,001 – $153,000. Upper class: greater than $153,000.

Is saving $1500 a month good? ›

Saving $1,500 per month may be a good amount if it's feasible. In general, save as much as you can to reach your goals, whether that's $50 or $1,500. You could speak with a certified financial planner to help develop a plan for your finances if you aren't sure how much money to save regularly.

Should rent be 30% of gross or net? ›

A popular standard for budgeting rent is to follow the 30% rule, where you spend a maximum of 30% of your monthly income before taxes (your gross income) on your rent. This has been a rule of thumb since 1981, when the government found that people who spent over 30% of their income on housing were "cost-burdened."

Is 30% of income on rent too much? ›

You should spend no more than 25% of your monthly take-home pay on rent. Spending 30% or more will mean not having enough room left over in your budget to put toward other important financial goals like saving for a down payment on a home.

Is it okay to spend more than 30% of income on rent? ›

What the data says. For years, financial experts have recommended a rule of thumb that says people should spend no more than 30% of their gross income on rent.

What percentage of income should go to housing Dave Ramsey? ›

Figure out 25% of your take-home pay.

To calculate how much house you can afford, use the 25% rule we talked about earlier: Never spend more than 25% of your monthly take-home pay (after tax) on monthly mortgage payments. That includes your mortgage principal, interest, property taxes, home insurance, PMI and HOA fees.


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