How Much Should You Spend On Rent?

Okay, I’ll admit – rent is a pretty boring topic. But, it is important to know how much should you spend on rent.

The amount of rent you pay is important as housing costs can make or break your finances.

Large, fixed costs such as rent, transport and bills can often dictate our budget. It can majorly affect our financial goals in a positive or negative way. For example, paying less rent could mean you could save more money, faster for a house deposit.

Rent is one of the largest costs we have to pay every month and therefore important to make sure you are not overspending in this category.

Here’s how much you should be spending.


How much should you spend on rent?

The generally accepted rule is that less than 30% of your income should be spent on rent.

Why 30%?

The reason for this figure is that generally paying more than this can indicate rental stress.

If you seem to be struggling with your finances, assess how much rent you pay as a percentage of your income – this rule is a good baseline to start with. You may get away with paying a lot less in a cheaper area but may struggle to keep under 30% in an area with a high cost of living.

In my case, the rent I have paid has ranged from 22% – 30% of my income living in Sydney and Melbourne.

Yes, even as a money-savvy financial blogger I have paid rent that was 30% of my income. So, if you are spending more, don’t feel bad as this is just a rough guide. In Sydney especially, spending less than 30% of your income on rent is a win!


I’m spending more than 30% of my income on rent, is this a problem?

It depends.

As mentioned, spending more than 30% might be the reality of a high cost city.

If you’re on top of your finances and saving money each month, you can get away with paying more in rent.

It can definitely work if you budget wisely and live frugally. However, if you’re living pay check to pay check and always short on money – you’re paying too much. If you’re unsure if you’re paying too much rent, here are 3 indicators that you are living above your means:


How can I cut back on rent?

Yes, you can get a roommate to cut down on rent and negotiate with your landlord but I’d say the best way is to sacrifice what you don’t prioritise.

The best way to do this is to make a list on what you need and really want – and, stick to that. Don’t let anything else sway you!

For example, if you don’t need a place with an indoor pool or gym don’t get one. Yes, they are nice to have but not essential.

It’s always better to have a practical rental that serves your needs best rather than the nice, bougie one that will kill your budget.

My first rental apartment

When I was choosing my first rental, I came across a cute little apartment. It was in a bougie area, close to public transport, restaurants and more. However, it was on the older side, didn’t have air conditioning, a dishwasher or laundry. Best part was the cheap rent.

A few friends told me they could never live there and would send me links to apartments that were double the rent. At first, I started to re-consider. I thought “I guess I could pay a bit more to have these nicer things. It might be worth it.

I had to ignore people’s opinions and focus on what I wanted. Did I really care about an old place? No. I needed a place in a great location, safe and clean – not luxurious.

I ended up living in that apartment for 1.5 years and really enjoyed my time there. Best of all, I never felt any rental stress!

Always go for the rental that works for you.


So, how much should you spend on rent?

Overall, using the 30% rule is a good starting point. After that, it is about reviewing your budget to see if you can pay you rent and hit all your money goals.

Published by Ruba Khan

Hi, I'm Ruba! The Money Marketer is a financial discussion space to discuss all things money and investment, with a touch of food and lifestyle.

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