What Percent of My Net Income Should Go Toward My Rent?

Developing a budget before you begin searching for a new apartment is the best way to ensure that you meet your monthly expenses without accumulating debt. The budget can also help to determine if you are living in an apartment that you cannot afford. A personal budget should include all expenses and set aside a portion of income for savings.

The monthly rent in a personal budget should cost up to 30 percent of net income. To figure the amount of rent you can afford each month, multiply your monthly net income by .30 to determine the maximum rental payment for your budget. When searching for an apartment, use the 30 percent amount as the upper limit for your housing.

Plan to budget a minimum of 10 percent of your monthly net income for utilities in the new apartment. When utilities are included in the monthly rent, you can add the 10 percent to the monthly rental limit. Utilities include electricity, heat, water and telephone expenses. A personal budget should also include expenses such as food, clothing, entertainment, transportation, insurance, loans, credit card payments, out of pocket medical expenses and personal care products.

While the maximum recommended percentage of net income for rent is 30 percent, you may find the expenses in your budget allow you to spend more. For example, you should plan to spend 15 percent of net income on transportation and car insurance expenses, but if those costs are lower, you can add the additional funds to your maximum rental payment amount.

You should plan to save 10 percent of net income every month. With reductions in monthly expenses, you may be able to put away additional money every month. Plan to save for big-ticket items, such as vacations or new entertainment equipment, instead of using credit cards to save on your monthly budget.