What % of your income should you spend on rent?

Brussels Sprout

Is there a rule of thumb out there for what % of your net income that people generally spend on their rent?

Just as an example, say your net income was 30k and you were renting a room for 500 a month then this would represent 20% of your income.

I understand that that is somewhat arbitrary and the value will depend on someone's circumstances and lifestyle choices but I'm just trying to get an idea of a range.

Cuddlesworth

Interesting question, but there is more to take into account then just rental income itself really. You can happily say you are saving 300 Euros a month on rent living somewhere else in the arsehole of nowhere but be paying 150 euros a month and two hours a day in commuting, extra 50 euros a month in heating because of bad insulation, costs of having a second car needed, increased bin charges, no shops or leisure/pleasure places of interest near. Give somebody a five minute commute and a plenty to do all the time and then ask how much they would pay.

Brussels Sprout

Cuddlesworth wrote: »

Interesting question, but there is more to take into account then just rental income itself really.

Yes I understand. So to make it easier lets say we are on about someone living in the city that they work in.

Like are there people out there who are paying 50% of their income in rent?

ProudDUB

Interesting question OP.

When I lived in the US, I read somewhere once that your mortgage payment should never be more than 30% of your income. If it is, you may have a problem meeting your other financial commitments, and have a decent standard of living too. Banks will also look at that when looking at mortgage applications. I guess that is a good rule of thumb when it comes to renting too. But I would give renters more leeway with that as they do not have to set additional monies aside to pay for home owners insurance, or replacing major appliances, or making repairs on their home, as in the most cases, they are the landlords responsibility and not the tenants.

I don't think that there is a definite rule of thumb for everyone, as people are in different places in their lives and have different incomes and financial goals and priorities. A college student who is renting digs near UCD, or a young single professional renting in the IFSC will have different financial obligations and needs than a 35 year old father of two who is trying to save for his families first home in the suburbs.

Cuddlesworth

Brussels Sprout wrote: »

Yes I understand. So to make it easier lets say we are on about someone living in the city that they work in.

Like are there people out there who are paying 50% of their income in rent?

I've paid roughly between 25% and 35% of my net earnings in rent alone before while house sharing and I'm currently looking at spending roughly similar living alone. All in nice areas with friends and family close by. I d'ont think I would ever pay 50% for that privilege.