Setting a Realistic Renting Budget
Setting a realistic renting budget can be harder than it sounds. Budgets aren’t set in stone and can be modified to reflect actual living expenses once you know what they are.
To find a realistic budget, renters need to estimate how much money you spend on groceries, gas, entertainment, household and beauty supplies, pets, kids, insurance...and other recurring expenses.
Rent does not include security deposits, fees, or utility or service charges that you should expect when first moving in.
Setting a realistic budget to include all expenses (and a buffer for unexpected expenses) is important to ensure you can afford where you live.
How to Find Your Rental Budget
Rule of thumb: Your rent should not be more than one-third of your income.
Step 1. Figure out your monthly income.
Step 2. Calculate all of your monthly expenses.
Step 3. Subtract your expenses from your income.
Step 4. Give yourself a small buffer on the number you have left over, and that’s how much you have to spend on your living expenses.
If you are planning for utility and other living expenses in addition to your rent, these are among the most common to expect:
- Electric. Tenants typically pay for this utility. Those in apartments should have a fairly small bill each month because of smaller square footage.
- Natural Gas . Gas is your responsibility. Make sure you are able to make the monthly payments, as the utility company can turn off your heat and hot water for money owed.
- Water and Sewage: Landlords often pay your water/sewer bill. However, in certain cases, you may need to pay for this utility and want to be sure you can make the monthly payments if needed.
- Trash: This can vary between landlord and tenant responsibility. Just like for water and sewage, you will want to make sure you can pay for this service if the need arises.
- Internet and Cable. You'll be responsible for this charge, and you may be able to get a bundled service from your cable or cell phone provider at a lower rate.
- Renter’s insurance. Duerksen & Associates requires you have a renter’s insurance policy. This covers any major accidental damage to the home caused by your or your guests. You can add onto your policy to cover the cost of your personal belongings, although this is not typically included in a standard policy. Ask your car insurer if they offer this coverage, as you might get a bundle discount.
Check our website for rentals here to see how current properties are priced and what utilities are included. This will give you a good idea of available rentals in terms of determining your budget and the size of the rental you can afford.
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