You’ve got a job. You’re seeking an apartment. And you’re asking, “How much should I spend on rent?” The answer can be simple or complicated, depending on how and where you live. In asking yourself this question, you may want to think about these factors:

  1. The oft-cited 30% rule
  2. Staying in a large, but expensive city, to invest in your future
  3. Considering an alternative, but still attractive, city to live and work
  4. How rent affects your ability to pay other bills
  5. Other ways to make the rent work — getting roommates or seeking additional income, for example

The simple (but not always applicable) answer is to try to pay no more than 30% of your gross income on rent. You’ll hear this repeated, again and again, as it is the most common piece of advice on this matter. And yet, many Americans are stuck in an expensive city and a low-paying job where this ratio just isn’t attainable, and that’s where it can get complicated.

Big City, Big Rent Payment

An estimated 12 million American households spend more than 50% of their annual incomes on housing according to the U.S. Department of Housing and Urban Development. If you are living in a big city, for example, you may be paying a high rent or mortgage payment for the privilege of the location. In New York and San Francisco, for instance, average rents for a one-bedroom apartment top $3,000 a month. Here you can easily find yourself burdened with a six-figure income.

An Investment in Your Future

Many people move to big cities for their careers, and many college graduates look for their first apartment in a large city as they seek good jobs. After all, this is often where the largest companies are headquartered. If a job puts you in a high-rent city, but it leads to an improvement in your income, you may be willing to pay more rent than you’re initially comfortable with for the time being, knowing that you’re investing in your future.

Also consider that if you’re paying more than 30% of your income in rent, but you have a high income, the common rule may not necessarily apply. With a high enough income, you may spend half of it on rent and still have money left for the finer things in life — and that’s a determination you should make based on your personal finances and comfort level.

Big cities offer many opportunities, which is one of the reasons rent can be high. Ask yourself if you are stuck in a stagnant career in an expensive apartment, and whether it may be better in the long-run to consider moving to a less expensive city — even if it’s moving outside of the metropolitan area to a suburb.

An estimated 12 million American households spend more than 50% of their annual incomes on housing according to the U.S. Department of Housing and Urban Development.

Consider Alternative, but Attractive, Cities

Every year, several publications make lists of the nation’s most affordable cities. Many of these cities may offer an easier lifestyle with less traffic and congestion, and larger living quarters for less money.

Many large companies have satellite offices or other operations in smaller or more affordable cities, so, depending on where you work, you may be able to transfer to a less expensive location. You may also find similar jobs in these cities on your own.

Increasingly, many Americans are freelancing, becoming independent contractors or starting small businesses on their own. Where you decide to live can have a big impact on your success and the success of your business.

Don’t Forget Your Other Bills

An important exercise when considering how much rent you can afford to pay is to add up all your other bills.

There’s another commonly cited formula in the realm of personal finance called the 50/20/30 budget guideline. It says 50% of your income should go to fixed costs such as rent/housing, utilities, transportation and minimum debt repayment; 20% should go toward paying down debt, building an emergency fund and saving for retirement; and 30% can go to day-to-day expenses and “wants,” including eating out, entertainment and shopping.

See if you can get your rent payment to fit into that scheme.

Tips for Making it Work

Like everything else in life, paying the rent is a balancing act.

You can move to a cheaper city, search for a smaller place, or find a roommate or two to split the rent. You can ask your boss for a raise. Or you can find a side gig to bring in some extra income.

There is no absolute formula for this, so consider the basic guidelines, tally up your income and expenses, work with what you’ve got and be flexible and willing to make some sacrifices in order to balance your budget.

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