How Much Should I Spend on Rent?

What you can afford depends on income and other expenses, like student loan payments and groceries.
Kelsey Sheehy
By Kelsey Sheehy 
Edited by Courtney Neidel

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How much should you spend on rent? Before you start scanning Craigslist and Zillow for rental options, determine how much you can truly afford to pay. Here are a few ways to figure that out.

How much should you spend on rent? Try the 30% rule

One popular rule of thumb is the 30% rule, which says to spend around 30% of your gross income on rent. So if you earn $3,200 per month before taxes, you should spend about $960 per month on rent.

This is a solid guideline, but it’s not one-size-fits-all advice.

If you live in an affordable area, for example, you shouldn’t pass up an apartment renting for $575 per month simply because it’s only 18% of your income. On the flip side, sticking to spending 30% on rent isn’t always feasible in a place like New York City or San Francisco, where median rents top $2,000 per month for a one-bedroom apartment, according to November 2022 data from Apartment List.

Work out how much of your income should go to rent with the 50/30/20 rule

You can also use the 50/30/20 budget as a guide to figure out how much you can afford to spend on rent. This method allocates your take-home pay (after taxes) to 50% for needs, 30% for wants and 20% for savings and additional debt payments.

So if you earn $3,200 per month after taxes, you’d divvy your paycheck up like so:

  • $1,600 for needs like rent, utilities, groceries, insurance and minimum debt payments.

  • $960 for wants like shopping, happy hour and concerts.

  • $640 for savings and additional debt payments.

Figure out how much you can afford to spend on rent

Let’s stick with our $3,200 per month income example. If you have a lot of expenses that fall under the needs category, your budget for rent could be pretty tight. Consider this example:

  • $280 monthly student loan payment.

  • $360 monthly car payment.

  • $135 monthly car insurance.

  • $175 monthly grocery tab.

Those expenses total $950 per month, leaving just $650 per month for rent and utilities. That might give you plenty of options in a place like Lake Charles, Louisiana, where the median monthly rent for a one-bedroom is $641, but you’d be hard-pressed to find a spot in Cincinnati, Ohio, where the median price for a one-bedroom place is $829 per month, according to Apartment List.

Rather than following an unsuitable rule, try adding up other expenses and identifying savings opportunities to work out a more realistic rent budget.

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Factor in other costs

Where you live affects everything from your commute to your workout routine. Factor in additional costs (or savings) you might incur depending on your rental choice.

Living farther from the city center, for example, is often less expensive. But you could spend hundreds each month on transportation costs to commute to and from work and social engagements.

Some rentals include utilities like gas and water, have an on-site gym or a washer and dryer in-unit. Factor in those perks when comparing the cost of rentals. An on-site gym, for example, could save you $100 per month or more on a gym membership. And in-unit laundry equals savings on time and money versus coin laundry or trips to the laundromat.

Look for savings

If what you can afford doesn’t align with the rental market in your area, look for ways to cut costs elsewhere. It’s natural — and wise — to look to nonessential spending to free up space in your budget, but you can often find savings among your necessary expenses, too.

  • Utilities: Heat, water and electricity are needs, but premium cable falls squarely in the “wants” category. Scale back your package to shave hundreds off your cable bill. Or cut the cord completely and snag a digital antenna on the cheap to access local channels.

  • Insurance: Compare car insurance rates to find the best deal. A 2017 NerdWallet analysis found that good drivers could have been missing out on saving $416.52 a year, on average nationwide, by not shopping around for car insurance.

  • Groceries: Get in the habit of planning your meals and use coupons to maximize your grocery budget.

  • Rent: Living solo means shouldering the burden of rent and utilities on your own. Instead, find a roommate and split the cost of a two-bedroom. Need a more affordable option? Consider renting a room in a group house.

Don’t neglect your savings in order to spend more on rent. Future you will thank you for making your emergency fund and retirement savings a priority. But in critical times, tactics like dipping into an emergency fund or applying for rental assistance programs may be necessary to help you pay rent when you can’t afford it.

Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.