How to Budget Properly as a Renter?

Why Are Rent Prices Increasing? 

Rent prices are at an all time high. While many Americans prefer to rent because it is more affordable than owning a home, this does not change the fact that renting is not cheap. This becomes increasingly problematic when we see how the cost of rent is growing faster than our wages can keep up with. 

There are several reasons why rent prices continue to steadily increase. Some of these reasons include: 

• Strong demand for rentals 
• Lack of supply in certain markets
• Increasing mortgage rates
• High operating expenses for landlords

Regardless of the reasons why rents are increasing, we can all agree that housing is a necessary expense. This leads us to the task of learning how to budget properly as a renter. If you are currently paying for rent and looking for budgeting tips and tricks, you’ve come to the right place! Keep reading to learn more about best practices in renting, how to save on expenses and budgeting hacks that will help you pay your rent each month with confidence! 

What is the 30% Rent Rule?

There are many guidelines and best practice advice that exists for renters to help them manage housing expenses. One such rule, the 30 % Rent Rule, is a money management concept that suggests that you should spend no more than 30% of your gross monthly income on rent. 

For example, if your take home income each month is $2,800, then you should search for rentals that are around $840 per month. This guideline is put into place with the idea that you will also have other mandatory life expenses that you need to pay for each month, but also to help you manage these costs effectively. While transportation, food, savings and entertainment, can all be considered important concepts in one’s budget, your rent is at the forefront of these expenses.
However, when looking at the 30 % rent rule, you need to carefully evaluate your budget and individual financial needs. For example, individuals with significant student loan debt, credit card debt, title loans or other needs may not be able to afford spending 30% of their income on rent.

In addition, the 30% rent rule can be problematic when one finds themself in a situation where there is no available housing within their 30% budget. In good news, there are some workarounds to this issue that can ease your budget and help you to allocate funds to your other financial goals. 

How Can I Save Money on Rent?

If you find yourself in a situation where paying for rent has you struggling financially, there are ways in which you can save money on rent! 

Some of these strategies can be incorporated if you are currently renting or in search of a new rental. In order to save money on rent, you may want to consider: 

• Find A Roommate: Living with others and sharing expenses can dramatically whittle down your living expenses. By sharing the cost of rent, utilities and even perhaps groceries, you can find yourself in a living situation that allows you to live on your own without breaking the bank. If you are struggling to find a friend willing to share rent, there are several online resources that help match up individuals looking for a roommate. Roommates.com, Roomster or RoomieMatch are great websites to check out! When searching for a roommate, you will want to carefully consider your preferences on gender, sleeping habits, work schedules and cleanliness. 
• Consider Your Location: Carefully consider your commute and how far you are willing to drive. By living in a less popular area or more affordable neighborhood, you will find that rent prices are more attainable.
• Cut Down on Amenities: Determine what is a need versus a want to you in a living situation. Do you need an apartment with a pool? Must you have a complex with a gym? By being flexible with housing that has a window unit over central AC or community laundry, you will find that rent prices are cheaper. 
• Timing: Mid-May through mid-September is considered a hot season for moving. By moving off season, you will find that rent and moving services are cheaper. In addition, you may find some move-in specials that will help you to save money as well! 
• Work for Rent: Do you have a special skill set? Inquire with your landlord or property manager on working in the leasing office or offering your skills as a maintenance worker. Many buildings will offer reduced rent in exchange for individuals who work for the building.

When budgeting as a renter, it can be helpful to either increase your monthly income, or cut down on your expenses. By following the above tips and tricks to help shave some money off your monthly rent, you can position yourself to have a little extra wiggle room in your monthly budget. 

Why Is it Important to Learn How to Budget as a Renter? 

Budgeting as a renter is crucial. Renting, while a viable housing option, is typically not something people want to do for their entire lives. According to a recent survey by Zillow, about 77% of current renters have a goal to purchase a house within the next three years. 

By learning how to budget as a renter, you will not only be able to afford your monthly living expenses but you will also be able to more easily achieve any financial goals that you may have, such as buying a home. 

In addition to the above, budgeting as a renter can yield the following benefits: 

• Encourage Financial Independence: Individuals who are financially independent and have a sense of self sufficiency are happier and more confident individuals! 
• Helps Maintain a Good Credit Score: By continuing to make on-time payments you are making positive marks on your credit score. This is incredibly important for setting yourself up for more financial opportunities in the future. 
• Reduces Stress: Scrambling for rent money last minute can be incredibly stressful, and bad for your physical and mental health. Through proactive planning and management, you can reduce your stress and contribute toward your overall sense of accomplishment.

Budgeting, particularly as a renter, is vital for good overall financial health. By incorporating these strategies into your life as early as possible, you can learn how to live within your means and work toward achieving financial goals