What is a decent percentage of rent expense to monthly gross income?

Answer 1

The lower the better. I'll tell you a secret that will let you quit work any time you like and take a few years off or retire early.

Take your gross income and divide it into three equal parts - thirds in other words.

Use one third for living expenses like rent and electricity and food.

Use one third for income tax, local taxes, fees, etc.

Put the remaining third in the bank.

If you do that, then for every year that you work, you are putting money for a year of living expenses in the bank.

But it's even better than that because the money in the bank is earning interest - at current rates about 5%. That means for every twenty dollars you have in the bank, then at the end of every year the bank adds another dollar to your pile.

It means that after you have worked 20 years you could quit and keep on living for ANOTHER 20 years at the same level but without working.

When you wonder why guys are retiring at 50 and 45 even though they are just ordinary working people - well that's how they did it. The sooner you start the better it works.

The biggest mistake you can make is to spend every cent you make. Those who buy the most expensive car they can afford and rent the most expensive apartment they can afford are doomed to work forever without ever having the good feeling of "money in the bank". And even worse, of course, are the people who go into debt, but let's not go there.

Answer 2

The old expense estimate used to be 25% of gross monthly income. Today, many mortgage companies will allow 41% to 49% of gross monthly income and the 25% rule has long gone down the drain since most people refuse to live in a cardboard box. Even though your question is about the cost of renting, these mortgage estimates may still apply.

Honestly though, it depends upon what you want and need, what your other expenses are, and what you're willing to pay for a rental. 41% to 49% is a decent percentage.

Answer 3

If you can afford it buy a small house or even a condo . Renting you have nothing at the end of the year except cancelled rent receipts . Why throw your money away ? The best rule of thumb is about 40% of net income after taxes and etc should go to rent at most . Maybe split aq place with a buddy till you have enough to buy . Good luck .

Answer 4

Check out the link for some good info...

Housing + Utilities 25 to 40%

Taxes (actual percent) 20%
Transportation + Upkeep 15%
Food 10%
Clothing 05%
Savings 10% and up
Entertainment + Vacations 05%
Debt (credit cards, personal loans) 05%
Other Expenses 05% and up

Answer 5

Years ago it was recommended that it be no more than 25%, but today is is around 35 to 45%

Answer 6

32% no more.....And even that's generous..

Keep in mind one thing, That it is" Not Only " Rent .

You have .....groceries/ phone/ cable/ loan(s)/ Car insurance and that's before a night out on the town......
My advise ..If you are lucky enough to still be living at home...
Pay all your debt off...
Save to buy your own place....and even then 32%.........

Answer 7

If you want a enjoyable life, 25% or less. Anything more than that, you stress yourself out, it will make you unhappy and your life quality will diminish

Answer 8

40%