Rental prices are at an all-time high. The average cost of living in the United States is around $10,000 to $18,000 per year, and that’s just for housing. Rent alone is a significant lifestyle cost if you don’t own a home yet. Let’s say you’re married with two kids who would like to rent a home in a safe neighborhood near work. You’re looking at paying about $2,500 per month for your rental mortgage payment before taxes and insurance costs.
If you don’t want to risk going into debt from overspending on rent each month, then it’s important to know how much money you should spend responsibly based on what type of budget you have available. Here are four tips to help you spend responsibly on rent:
1. Know the Cost of Living in Your Area
The first step is to research the cost of living in your area. Luckily, this information is available from various sources, such as the U.S Census Bureau and Kiplinger’s Personal Finance Magazine’s annual Cost of Living Indexes, which are based on spending patterns for housing, food, healthcare, transportation, and other living expenses. This data provides the average household spending on various items by category. With a clear picture of the average cost of living in your area, you can better assess if a location is right for you.
Remember that you’ll need to provide proof of income and possibly pay a deposit when you sign your lease. So, be ready to provide employment or self-employment proof of income in the form of pay stubs, bank statements, tax returns, or other financial documents. Don’t forget to budget for the unexpected. A good rule of thumb is to have at least three months’ worth of expenses saved in case you need it. Renting property comes with extra costs that you’ll want to make sure you can cover comfortably.
2. Figure Out What’s Included in the Cost of Rent
Is it electricity, water, gas, or trash pickup? Figure out what is included in your rent. Then, figure out the average cost of all utilities that are not included, and add the total to your monthly payment. Do this before you sign a lease or commit to paying for an apartment. Include good judgment on how much extra money should be added to your monthly rent, so it does not become outrageous. You don’t want to be spending over half of your income on rent while still trying to eat and pay other bills.
If you’re renting a house, the cost of rent is probably going to include lawn service as well as utilities. Make sure that all of these services are part of your monthly payment before you commit. You can avoid surprises down the road by doing your research ahead of time and reading the fine print on your rental agreement. You want to have a good idea of what you’re getting into before you sign anything that will bind you legally.
3. Negotiate When You Renew a Lease
If you’re on a month-to-month lease, or your current agreement is coming up for renewal, negotiate with the landlord to secure a cheaper rent while still keeping the same amenities. Most people don’t know that they have this option, but you can always ask to take a look at their other vacant apartments or houses and see if they would be willing to offer similar rates. Simply asking for a discount will probably not get you anywhere, as your landlord may believe that the rent is already quite low.
To negotiate effectively with them, you must show how you can help the landlord fill up their vacant units. If you’re a good tenant and pay on time, then they may be willing to lower rent for you, as it is easier than finding someone new. Alternatively, look into what amenities your current place lacks that others around might have, such as renovated kitchens and bathrooms. Pointing out the good qualities of other units will make you look better by comparison.
4. Consider Private Rentals
Private rentals are becoming more popular. For those looking to rent as a group, many options are available through companies like Airbnb and HomeAway. In addition, these types of rentals also typically offer the convenience of an entire house or apartment that comes with amenities such as appliances and internet access instead of just a single room in a shared space.
However, this convenience might not be worth it if you aren’t able to meet your financial responsibilities. If you find yourself overwhelmed with costs and struggling to pay rent, even a private rental may put additional stress on your budget. However, it is possible for individuals and groups of people renting together to host their own shared space that they can maintain control over while also saving money.
Spend Responsibly to Save Even More
By spending responsibly on rent, you can save even more for other things in life. You don’t have to settle for paying more than you should. If your apartment is too expensive, you can still find an affordable place that meets all of your needs in a safe and friendly neighborhood. Using these tips will help you spend responsibly on rent, so that you can stretch every dollar as far as it can go.