When you need to move to a new place, there are many things to think about. What amenities need to be in your home, what kind of neighborhood do you want to be in, how far is it from your work or school, and so on. But one thing that we don’t spend as much time thinking about as we should is calculating the rent we can afford. This process seems easy, especially if you’ve spoken to a realtor or certain leasing agents, but there can be some hidden costs you aren’t aware of.

Two Ways to Calculate Rent

The rule of thumb most people hear about is that your rent should be about 30% of your monthly income. So that means if you’re making $36,000 a year, or $3000 per month, you should be able to put (30% = .30, 3000x.3=900) $900 toward rent each month. If you check sites such as Apartment List.com, you can see where that rent would fall in most major metropolitan areas. (Spoiler: it’s not enough in some of the biggest cities like New York or San Jose, but would be okay in Houston or Phoenix.)

Another way to see what you can afford, which has slightly simpler math, is just to look at the monthly rent and multiply it times 40. That will show you the yearly income necessary to afford the rent and other expenses. So if the rent is $900/month, (900×40=36000), you’ll need a yearly income of at least $36,000 for a landlord to give you a lease.

If you’re not certain how to do the calculation, or math isn’t your strong suite, there are sites such as Zillow’s Rent Affordability Calculator that can do the hard work for you.

Think About Debts When Making Budget

The problem with these calculations, though, is that they don’t take into account your other monthly debts. If you owe for a car loan, student loans, or similar debts, you should put those into consideration for your monthly budget. Some people suggest that you add rent + debt payments together for your 30% of monthly income. Others have a more-reasonable expectation of budgeting about 40% to 50% of your monthly income for rent and other debt payments.

Another common budgeting rule is 50/30/20. That can be summarized as 50% on rent and other fixed expenses like utilities or transportation, 30% on entertainment or day-to-day things, and 20% on debt payments. This allows you to have some more flexibility with estimating your rent payments, while still keeping you in a reasonable budget.

Know the Area

Note that these are just rules of thumbs, and things are often different depending on where you live. Most people in New York City, for example, don’t stick within 30% or sometimes even 50% of their monthly income. There are ways to make it work—roommates being the most common—but you need to know what to expect.

The Apartment List calculator linked above is just one of many resources you can find online to help figure out what the area you’re moving to will be like. If you know which city you’ll be in, you should look at other resources to find which areas tend to cost how much. Sometimes rent may be a bit lower in the suburbs, sometimes it’s lower near the city center, but then you should consider commuting times and other factors for cost of living.

Once you know where you can go, remember Gerber Moving & Storage can help get you there for an affordable price.