• Your location

Housing costs vary drastically in different locations, so where you live largely determines how much you pay. Realistically, if you’re living in a city like New York or San Francisco, you’re going to be paying more for a smaller space. If you live somewhere like Indiana or Ohio, you are likely to get more bang for your buck.(3)

• Your financial standing

When you apply to rent a house or apartment, your potential landlord will check your credit to determine if you are a “safe” renter. Ultimately, your credit score factors into the decision of where you can live and thus how much you will be paying for rent. 

• Your personal preferences

If you know that you prefer to invest more in a lavish, modern home, then you can aim to spend around 40% or more of your annual income on your rent. If you are willing to sacrifice some home luxuries to allocate money to other areas of your life, then aim to spend 20% of your income on housing expenses.

• Your debt

This 30% rule does not take into consideration the nuances of your monthly budget. If you’re facing major amounts of debt that you need to pay off, allocating 30% of your income to rent every month may be too much. This is where you can allocate a thrifty amount of your income—perhaps 20%—to your rent.

• Other home-related expenses

Looking at a rental price can be quite deceiving because it does not always include utilities. When looking at new rental apartments or homes, it’s important to ask what the monthly price includes and how much the security deposit is. Often, rental spaces do not include electricity, water, or internet utility bills. These monthly expenses should be factored into your rental budget. Additionally, you will need to furnish your space. While this isn’t a recurring fee, the upfront cost can be significant (consider splitting your new furnishings in easy installments with Zip!).

• Other recurring expenses

Outside of rent, you are most likely going to be spending your monthly net income on other necessities like groceries, insurance, phone plans, gas, and more. These expenses fall into the 50% bucket of the 50/30/20 plan. If you’re spending 40% of your income on your rent, you should ask yourself if you’re willing to use only 10% for those additional expenses or if you’re comfortable compromising on the two other categories.

• Negotiate lower rent

When you are signing onto a new lease or renewing a lease, you have the opportunity to negotiate the housing expense with your landlord. This can seem like a battle to anyone unfamiliar with negotiations, but it’s in your best interest to ask. The worst they can do is say no! A few negotiation options include asking to prepay for several months at once, committing to a longer lease, giving up a parking spot included in the rental, getting a referral bonus if there are empty units in your complex, or sharing that you don’t have a pet in a pet-friendly apartment.(5) All of these questions create space for you to ask for a monthly discount or more, which can lead to an affordable housing option.

• Keep tabs on your utility bills

You can also save by keeping your water or heating expenses down, or giving up your cable package entirely. Watching the Real Housewives the day after it airs is a small price to pay for more financial freedom! 

• Bargain shop

To be frugal about your home expenses outside of rent and bills, you can shop at discounted retailers like HomeGoods or online resale platforms like Mercari for some of your home furnishings. You could also consider replacing the fast-fashion clothes and other disposable items you buy over and over again with quality items that’ll go the distance. While the upfront cost is sometimes steeper, the long-term savings are worth it.