Budgeting Tips to Help You Afford Your Monthly Rent
May 19, 2017 | by Guest Posts
This is a guest post by Abodo.com, a Madison, Wisconsin-based start-up whose mission is to create a new, better kind of apartment listing service.
A recent study by ABODO apartments entitled “Heavy Housing Burden” dug into trends surrounding the availability of affordable housing, namely how many renters across the country are paying more than 30% of their income on rent (the HUD-determined threshold for being housing-cost burdened). Heavy Housing Burden reports that nearly half of all U.S. renters are facing a cost-burden, and that trend largely rings true for Texas.
According to data from the U.S. Census Bureau, in the Killeen-Temple metropolitan statistical area (MSA), 49% of renters are cost-burdened — the highest figure among Texas’ major MSAs. And the percentages loom large across the state: 48% of renters in Houston-The Woodlands-Sugar Land, 48% of renters in Austin-Round Rock, 47% of renters in Dallas-Fort Worth-Arlington, 46% of renters in San Antonio-New Braunfels, and 44% of renters in El Paso are cost-burdened.
And the problem affects more than just low-income households. In the Killeen-Temple MSA, 91% of renters earning less than $20,000 are housing-cost burdened, as are 74% of those who earn between $20,000 and $34,999. For renters earning $35,000 to $49,999 — the income category that includes the area’s median income — nearly 34% are burdened.
While income does contribute to a household being cost burdened, it’s not the only factor. It’s also a matter of knowing your budget, what you can afford, and finding an apartment that fits within budget. Before you sign a lease, consider these budgeting tips to ensure you can afford your rent:
- Know Your Monthly Income — If you’re a salaried employee, this might be a little more complex than looking at your year’s earnings and dividing by 12. Depending on your pay schedule, you might get more paychecks some months than others.
- Add up Your Expenses — And make sure it’s all of them! Go through a few months of your bank statements to make sure you understand how you spend your money each month.
- Set a Budget — Armed with your income and your expenses, now is the time to decide how much you can spend, and what you can spend it on. As discussed earlier, it’s important to keep your monthly rent below 30% of your income, to allow yourself plenty of breathing room for building up a savings account and keeping up with your other monthly bills. A common way to budget is through the 50/20/30 rule, which encourages spending 50% of your income on the essentials — things like food, housing, and keeping the lights on. The next priority is the 20% that should go into savings, and then the remaining 30% is your personal money for nonessentials like your cellphone plan and personal shopping. Whatever your budget is, make sure it’s comprehensive.
Need Help Setting a Budget?
TSAHC created the Texas Financial Toolbox, a web site that gives you an easy way to find the tools you need to achieve your financial goals. The web site can connect you with an organization that can provide financial education and credit counseling to help you manage finances and stay within a budget.
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