Listing down the qualities of a perfect rental apartment is quite easy: location, space, storage, proper flooring, adequate lighting, etc. Finding an apartment that checks off all of those things as well as one that is within your budget can be a tad more difficult. But before you even start apartment hunting, you should first determine how much you can afford. And fortunately, it's not that difficult to do.
There are varying ways to figure out how much your rent budget is, but a proven method involves these two steps.
Get Mathematical.
Your rent should only be around 30 percent of your income. Some people can go higher, but generally speaking, 30 percent is a reasonable range that will allow you to still spend on other living and entertainment needs, as well as will allow you to save money for emergencies.
To figure out how much 30 percent is, take your household annual income and divide it by 40.
Also take a number of other points into consideration. Make this calculation with your actual take-home pay and not your salary. Hefty taxes and other withholdings from your check means that you have less disposable money than your salary might lead you to believe.
Remember that this amount needs to pay for all housing costs and not just rent. Consider things like insurance, utilities, and other home-related expenses.
Use Personal Comfort As Basis.
If you would like to perhaps focus your budget more on discretionary expenses like travel and entertainment, you may want to spend less on your house than your computation suggests.
On the other hand, living in places like New York City or San Francisco involve higher rental costs, but may be saving you money on transportation or other living expenses. This means that you feel more comfortable allocating a bigger portion of your budget on rent than you might in other places.
If you have children, you should also take into account how much their expenses will affect your figure. Paying for daycare or a private school will change how much you can spend on rent.
Use your personal comfort as a basis for a realistic budget. Determine how much you can allot for necessities, everyday expenses, and savings. Then, figure out how much you are willing to pay.