So You’re Looking for a New Place… But How Much Rent Can You Actually Afford?

Maybe you’ve just graduated and are looking for your first apartment. Or maybe you’re moving to a new city. Maybe you’ve gotten a new job or you’re moving because of a new relationship (or break up). Whatever your reason, the first step is finding out how much you can actually afford! Don’t worry, it’s not that complicated and you don’t have to be a math genius. Let’s break it down together so you’re not busting your budget every month trying to make rent.

Start with Income 

You’d be surprised how many people don’t consider their monthly income when looking for a new place to live. They look at the different neighborhoods, they check out the local parks, schools, and cafes, they figure out which part of town they prefer to live in. Then they look at what size, studio, 1 bedroom, or larger? Then they start looking at the prices and base it off what the “market rate” is. They think, “Well, I have to pay this if I want to live here.” What happens next? You’re living in an empty apartment eating ramen noodles because your whole paycheck is going to rent!

We want you to avoid being stressed and to thrive, not just survive. So in order to avoid this trap- start with your income instead. Look at your payslip and figure what your monthly income is BEFORE taxes, retirement withdrawals, or any other deductions.

What if you have variable income? Look at your income the past 6 - 12 months and go with the lowest of what you are guaranteed to be making every month. In this scenario, conservative is best. If you end up making more one month- great! More money! If you end up making less, you don’t have to worry about making rent payments or late fees.

What if you have side hustles? It will be up to you how you handle that income. If it’s a side hustle you are going to be continuing with- great! Then include it in your monthly income number. But we don’t want you to get burnt out doing a million side jobs and feel trapped, not being able to quit or you won’t be able to afford rent. So rather put that money towards extra debt payment or future savings rather than something as important as your living situation.

Think about your Debt 

Before we set a budget for rent, look at your debt payments. Student loans? Credit card debt? You need to always be making at least the minimum payments (preferably paying them off in full every month) but if you find yourself under water on some of these loans, you might have a goal of paying them off as quickly as you can! If you want to prioritize being debt free, make sure you take that into consideration by calculating out how much you’ll be paying every month towards your debt and what percentage of your income that represents. 

30% Rule 

Ok, now we can actually start looking at some rent prices! The 30% Rule is one of the easiest ways to figure out how much rent you can afford. Simply put, your rent should not be more than 30% of your pretax income. So take your monthly income and multiply it by .30 (or 30%). This should be your maximum monthly payment. 

If you have a high debt percentage, try to go lower towards 25%. We get it, with salaries rising slower than the cost of living and the current affordable housing crisis- this may be a difficult thing to do. But we want you to be able to keep things nice and balanced with other expenses as well and, let’s be real, be able to afford all those Starbucks morning lattes. 

Don’t Forget About Hidden Costs

 When signing an apartment lease, there are some other costs to keep in mind. It could include, but not limited to: 

Utilities

First and last month’s rent

Security deposit

Insurance

Maintenance

Broker Fee

A trip (or two!) to Ikea

These costs add up- some of them are a one time fee, while others are monthly, and some might even be already included in the rent! So make sure you have that money saved up and budgeted for before sealing the deal! 

Think About Your Lifestyle and Goals 

So you did the math, and yes, you could afford that super sleek downtown apartment. But your goal is to be able to pay off debt and your passion is travelling every chance you get. So, is that apartment really worth it? Make sure you look at the total picture of your financials and as we always love to say at Soro, KNOW YOUR WHY! What’s worth spending on for you?

Bottom Line: Find Your Perfect Budget for YOU!

Figuring out how much rent you can afford doesn’t need to be complicated or stressful. It’s an exciting time finding your new apartment! Start by taking your income, use the 30% Rule, and don’t forget those extra housing costs! Factor in your full picture financials: debt, lifestyle, and future goals. And decide how much YOU feel comfortable spending every month. At Soro, we want you to thrive, not just survive. We want you to be able to afford those rent payments without stressing, and still be able to live your fullest life with your own goals. You’ve got this!

💡 Want more money tips? Check out the Ultimate Money Guide to learn how to budget like a pro, save for your dream home, and build lasting financial habits!