How much should I spend on rent?
As a general rule of thumb, you shouldn't spend more than 30% of your income on rent.
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With more and more Aussie's renting, it's a good idea to assess how much money you should be spending on rent. As a general rule of thumb, you shouldn't spend more than 30% of your income on rent. So if you earn $1,000 a week, you'd want to spend about $300 on rent each week.
You can also use the 50/30/20 rule to see how much you should spend on rent
The 50/30/20 rule suggest you allocate 50% of your income to essentials like groceries, bills, and yep, you guessed it - rent! 30% of your income should then be set aside for your wants, including eating out, splurging on new clothes, or Netflix. The last 20% of your paycheque should head straight to your savings.
The 50/20/30 rule might not work for everyone and you'll need to adapt it to your own situation. For example, if you live closer to the city centre, you might expect to allocate more of your monthly income to rent. In such a case, once you find yourself near the 30% threshold, you should consider allocating less money to non-essentials.
Considering your overall finances
In order to get a clear understanding of your rent budget, you first need a clear understanding of your finances. This means knowing the amount of cash you have monthly after paying off taxes. The best way to get a clear overview of your finances is by using a smart budgeting tool. The Finder app, for example, is a money management tool that helps you stay on top of your finances. Using a single dashboard, you could get a clear understanding of your bank accounts, loans, investments and credit card bills. Additionally, the Finder app helps you monitor your transactions, find the best shopping deals and monitor your credit score – all for free. It's a simple, intuitive tool that goes a long way in helping you understand your finances. In turn, you'll then be able to gauge how much to spend on rent.
Minimising your rent costs
If you're having trouble deciding how much to spend on rent, you could always try reducing your rent costs before coming to a decision. Here are some handy tips to consider.
- Sublet the rooms in your apartment. If you are living in an apartment with more rooms than you need, consider sharing it to split the rent.
- Work with your landlord to reduce the cost of rent. If you agree to a longer lease or reliably pay rent, your landlord may be open to deferring a few months of your rent.
- Try downsizing. Consider downsizing your apartment or renting a cheaper apartment further away from the city centre.
See where rent fits in without our personalised budget creator
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