Tips to calculate rental affordability
Renting a place of one’s own is a huge step, especially for first time renters. Whether you are moving into your first home with a brand new job, or leaving home with family to start afresh in a new city, finding the right place that does not put a hole in your pocket is a big win.
Many new renters often find it difficult to assess and set the right limits for the amount of money that should go into rent. There is no end to the number of amenities available, and thus, putting a budget cap will help you narrow down the house hunt to a realistic place. Here are a few expenses to keep in mind while calculating your rent affordability.
Basic utility bills
Make a list of the estimated monthly utility costs that you will need to pay. Items such as electricity, water, fuel or transport, telephone or mobile recharge, internet and such essentials fall into this category. This also includes all your subscriptions like gym, yoga or any classes you take, library, cable, Netflix, Spotify or any other streaming service that you need to pay monthly. Add up all of the expenses that you will need to pay every month, and deduct this sum from your income to begin with.
Food and other needs
Next you need to calculate your monthly expense on consumables. Make note of how much money you spend on the basic food essentials that you consume every month. Add to that luxury costs such as non-essential or fancy foods that you consume often. Do not forget to factor in costs like ordering in, eating out, clubbing, partying and other expenses that you usually spend money on. Make sure to include their costs of any regular medication, or supplements you take, as well. If you have pets do keep an account of their expenses here too.
Miscellaneous expenditure
Other than your basic living expenses, make a list of any miscellaneous expenditure that you have. This could include anything from any loans, insurance and investments, or donations that you spend your money on. If you do not have any investments as of now, it is a good idea to set yourself a monthly savings goal for emergencies and such. Add up these estimated amounts and deduct them from your spendable monthly income.
Non-monthly expenses
Once you are done with the list of all the monthly expenses that you have, it is time to sort out your other periodical expenses. Bills, subscriptions, taxes or payments that you need to do quarterly, half-yearly, annually or in any other format should be factored in. If you, your dependents or pets have any regular medical expenses, tests etc, make sure to count them in your expenditure as well.
Once you have deducted your regular expenses and emergency savings from your income, you can get a basic idea of how much money you can spend on your rent. This will help filter your house search effectively.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
