How much you pay in rent depends on a number of factors. These include:
- Where you live/standard of living
- How much you currently make — or better yet, how much you have left when you pay off things like your student loan or car note
- Your preferred living arrangement
Let’s discuss each of these.
Where You Live/Standard of Living
It goes without saying that some regions of the United States are more expensive than others.
It is cheap to live in most of the mid-western and southern United States — maybe with the exception of the popular parts of Florida.
Living on either of the extreme coasts can get expensive very quickly.
It is not uncommon to rent a one bedroom space in San Diego or Los Angeles for $1,500. Move up to the San Francisco/Bay Area and the situation is even worse.
And in places like Boston and New York City, sometimes renting might actually be the cheaper option over 30 years versus buying a home!
So, where you live has an impact on what you will pay as rent.
If you are bent on living in a more expensive area, you might want to consider the following:
- Get a roommate to split the costs so that you’re not in over your head.
- Move a little out of the city to find cheaper accommodation. Boston and New York City for instance have excellent public transportation systems. You can take advantage of that and live a little further out from the city. Usually, moving just 10 or 15 miles outside the city could mean much cheaper rent.
Apart from what it costs to rent in a place, you might also want to consider the cost of food and other essentials in the area.
The next factor to consider in how much rent you will be paying in your chosen city is your income.
In most cities, landlords require that you make two to three times the rent in order for them to draw up a lease for you.
So for instance, if your rent is going to be $700, your landlord may need proof that you make $2,100 each month.
And so this is what you should budget for and it makes a lot of financial sense. Why would you pay rent and basically be left with nothing to take care of your other living expenses when you could plan ahead and choose a place that doesn’t break the bank for you?
Another factor to consider in how much rent to pay is something we already mentioned above but which we will go into detail here.
How much does it cost to live in the city?
Here are some expenses:
- Child care
All these expenses largely depend on where you live and count towards how much you will have left over to pay your rent.
In more expensive cities like San Francisco or Boston where paying $2,000 in rent per month is common, it might be a challenge to come up with $6,000 each month from just your job.
If that is the case for you, I strongly suggest that you start a side hustle that will cover other expenses so that things are not so tight all the time.
Your Preferred Living Arrangement
Last but not least, in deciding how much you should pay in rent, it is important to consider your preferred living arrangement:
- In an apartment, townhouse, or regular house?
- Will you be splitting the costs with a friend, roommate, or partner? Do you need to live with someone else to reduce costs?
- Do you want to live at the city center where all the action is happening or do you prefer a quiet suburban area?
- Do you prefer to have a brand new apartment with all new household appliances or does that not matter to you?
- How long will you be living there? Do you plan to live here long-term or is this short-term?
All of these questions are important to answer as you think about where you want to live and determine how much you should pay in rent.
A Good Place to Start
I hope this post has given you a lot to ponder.
My last word on a good place to start when it comes to paying your rent, however, is to make sure you are making at least two and a half times the rent before you sign a lease. A more comfortable position would be to make at least three times the rent.
This will give you enough wiggle room for other expenses once the rent is paid.
What’s the average rent in your city? Comment below and let us know. You might even find a roommate in the comments!
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.