Budgeting For Rent

 For the full article and tips visit Moneywatch.com

When I first moved to Manhattan in 2002, my monthly rent was a mere $500 a month – or 15% of my take-home pay. Granted, I was sharing an apartment with a married couple and living north of 100th street (far from the cool, clubby downtown scene). But for this underpaid, fresh-out-of-graduate-school, entry-level journalist, it was worth every penny – and more to the point, it was all I could comfortably afford.

For many young workers, budgeting for that first apartment can be a major battle, considering starting salaries have remained flat over the past decade, while living expenses have soared. For those living in expensive cities like New York and San Francisco, it’s not unheard of for some young adults to spend close to half their monthly take-home paycheck on rent. (My broker tells me that in New York City, most landlords require a maximum of 25% of one’s pre-tax income go toward rent. But apparently some landlords don’t do a proper income check, or they rely on the income of a guarantor – usually a parent.)

That 25% limit is a decent rule of thumb for anyone budgeting for rent; expect another 3% to 4% to go to utility costs. Any more and you risk running under the rest of the month, considering you’ve still got your car payment, food, student loans and credit card bills to address.

For tips on how to save on rent visit my story at Moneywatch.com

Photo courtesy TurkeyChik from Flickr