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How Much Should You Spend on Rent?

By Nicole Bustamante

If you have a catchy earworm or bizarre TikTok video living rent-free in your head, you may be thinking: seems like a sweet deal. Unfortunately, you can’t generally get away with living rent-free IRL. That is unless you’re living at home with your parents…which many of us currently are (thanks, COVID-19!). 


But, if you value your independence and not having to check in with your mom every time you leave the house, then you’re most likely paying rent to someone, somewhere. It can be hard to gauge just how much of your income should be going towards your rent, but thankfully we’re here to guide you through it all so you can balance the necessities in your life. 


Start with the 50/30/20 Rule


When evaluating your rental budget, consider the overarching 50/30/20 financial plan. This rule splits your income into three portions: 50% of it goes towards your needs, 30% goes towards your wants, and 20% goes towards your savings and debt payments. This is a great general outline to follow, but we recommend that you also craft a detailed budget and breakdown of your income.


In an ideal world, you will want to spend 30% of your income on rent. Sadly, we don’t live in a perfect world, so this ratio can flex based on several factors.


  • Your Location

Housing costs vary drastically in different locations, so where you live largely determines how much you pay. Realistically, if you’re living in a city like New York or San Francisco, you’re going to be paying more for a smaller space. If you live somewhere like Indiana or Ohio, you are likely to get more bang for your buck.


  • Your Financial Standing

When you apply to rent a house or apartment, your potential landlord will check your credit to determine if you are a “safe” renter. Ultimately, your credit score factors into the decision of where you can live and thus how much you will be paying for rent. 


  • Your Personal Preferences

If you know that you prefer to invest more in a lavish, modern home, then you can aim to spend around 40% or more of your income on your rent. If you are willing to sacrifice some home luxuries to allocate money to other areas of your life, then aim to spend 20% of your income on housing expenses.


  • Your Debt

This 30% rule does not take into consideration the nuances of your budget. If you’re facing major amounts of debt that you need to pay off, allocating 30% of your income to rent every month may be too much. This is where you can allocate a thrifty amount of your income—perhaps 20%—to your rent.


  • Other Home-Related Expenses

Looking at a rental price can be quite deceiving because it does not always include utilities. When looking at new rental apartments or homes, it’s important to ask what the monthly price includes. Often, rental spaces do not include electricity, water, or internet utility bills. These monthly expenses should be factored into your rental budget. Additionally, you will need to furnish your space. While this isn’t a recurring fee, the upfront cost can be significant (consider splitting your new furnishings in 4 with Quadpay!).


  • Other Recurring Expenses

Outside of rent, you are most likely going to be spending your income on other necessities like groceries, insurance, phone plans, gas, and more. These expenses fall into the 50% bucket of the 50/30/20 plan. If you’re spending 40% of your income on your rent, you should ask yourself if you’re willing to use only 10% for those additional expenses or if you’re comfortable compromising on the two other categories.


These are just a few factors that you should consider when it comes to allocating your income and deciding how much you want to spend on rent. Keep in mind that these general rules don’t take inflation or rising rent prices into account, which can also impact your budget.


Balance Your Rent with Savings Elsewhere


If you know that your rent is going to take up more of your budget than you were hoping, you can try to negotiate the cost or look to save elsewhere when it comes to your living expenses.


  • Negotiate Lower Rent

When you are signing onto a new lease or renewing a lease, you have the opportunity to negotiate the cost with your landlord. This can seem like a battle to anyone unfamiliar with negotiations, but it’s in your best interest to ask. The worst they can do is say no! A few negotiation options include asking to prepay for several months at once, committing to a longer lease, giving up a parking spot included in the rental, getting a referral bonus if there are empty units in your complex, or sharing that you don’t have a pet in a pet-friendly apartment. All of these questions create space for you to ask for a monthly discount or more. 


  • Keep Tabs on Your Utility Bills

You can also save by keeping your water or heating bills down, or giving up your cable package entirely. Watching the Real Housewives the day after it airs is a small price to pay for more financial freedom! 


  • Bargain Shop

To be frugal about your home expenses outside of rent and bills, you can shop at discounted retailers like HomeGoods or online resale platforms like Facebook Marketplace for some of your home furnishings. You can also shop for other needs like groceries or clothing at places like Grocery Outlet and Marshall’s. 


Last But Not Least: Use Quadpay!


When it comes to keeping your expenses in check, Quadpay is your best friend. Not only can you split purchases for groceries and other expenses into 4, but you can also pay off your bills and debt. You’ll still need to keep a close eye on your finances, but using Quadpay makes them that much more manageable.

Get started with Quadpay today

Quadpay’s editorial content is not written by a financial advisor. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

About the author
Nicole Bustamante

Nicole Bustamante is a writer and journalist passionate about storytelling and the art of fashion. She has written for The Zoe Report, Angeleno Magazine, Modern Luxury Interiors California, and more in addition to writing for her personal blog.