It’s important to have a solid understanding of your financial situation and what you can afford before you start looking for that perfect rental home. Take the time to write out all of your current and anticipated expenses and compare it to your income.
Start by asking yourself the following questions and gather all supporting documentation:
- What is your monthly take-home pay? Experts generally suggest that your total cost for housing should be between 20 and 30% or less of your take-home income. For example, if you take home $3,000 a month, you may be able to afford a monthly rent of between $600 and $900 per month, including utilities.
- How much have you saved for upfront costs like a security deposit and pet fee? In addition to your first month’s rent, most landlords will require a security deposit of about one month’s rent upfront. If you’ll be moving with a pet, be prepared to pay a pet deposit or a monthly fee.
- How much do you spend each month? You’ll need to account for your current living expenses and all anticipated expenses. Be aware of other potential costs that may come with renting, such as utilities and parking, if applicable.
- What is your financial cushion and savings plan? You’ve got the money for the security deposit and first month’s rent, but you’ll also need financial reserves for life’s unexpected emergencies such as an illness or temporary job loss. You should also consider any future major expenses such as a down payment on a home, a wedding, or college tuition.