If you are out of college or school, just starting off by yourself and have to find a new place on your own, you will have to create a budget. Unless your company pays for your accommodation, which is quite rare, you have to make ends meet with rent, food, utilities, travel, and have some left over for savings. Rent will probably be the biggest chunk of money leaving your hands regularly at the start of every month, so it makes sense to chart it out effectively. If your job pays by the week, you have a lot of planning to do.
Getting to the rent, it is quite obvious that the more you pay, the bigger and better your home will be, things like location and the distance from work also factor in to this. If you get a cheap place far from work, you will be stuck traveling everyday which costs time and money. If you find an apartment close to the office, it may save you on time, but the rents may be excessive. Finding the right balance is key. Here are a few pointers to keep in mind when allocating rent in accordance to your cash inflows.
Can you afford it?
Before deciding on how much rent you can spend, you will need to first calculate how much you can afford. There is no set rule on this calculation as there are too many variables in the equation. It is generally accepted by financial experts that the money put in rent should not exceed 30% of monthly income. That should give you a general idea on money amount you can safely spend.
Make room for utilities
In some cases, utilities like electricity, water, maintenance and gas may not be included or there may be set payments to make every month, so factor those in as well.
Location, location, location
It is almost a cliché now, but where you live has an effect not only on rent, but also lifestyle. Simple things like markets, malls, schools, restaurants, and offices can make a big difference over time. Having such conveniences within arm’s reach is often reason enough to shell out a few more bucks every month. You may not even need to drive or take the train to work.
Some people feel cramped in small spaces, others feel lost in big spaces, so you need to get an apartment that matches your personality. Do you need a spare bedroom? How many bathrooms do you want? Will a small studio be enough? What about family, are you planning on expanding it? These are just some of the questions that you will have to consider while thinking about how big or small a space you prefer.
All of these things can change if you get a better job, land a promotion or see a sudden spike in your career, but it can also work the other way around. So being careful about rent is a bit more important than finding a dream home.