How Much Should You Spend On Rent?
When living in an expensive city like Chicago, it’s smart to know exactly how much you should spend on your rent. Rent prices in cities can vary by location, building, or even block. Searching for an apartment is already a stressful situation which is why we recommend having the tools a qualified realtor can give you, but unfortunately, they can’t tell you how much YOU can afford for rent. Only you can figure that out, so in this article, we will help by identifying some very helpful renting rules, taking a look at renting in Chicago, and finally, some great places to rent in a few different locations!
You’re ready to take on the responsibility and excitement that comes with finding a new place to rent, but have you figured out how much you can afford? Before you can talk to a realtor or do your own search for a home to rent, you need to know what you can afford. There are a few different ways to figure out the amount you can spend. Below we will look deeper into the 30% rule, the 50/30/20 rule, and understanding other, non-rent related costs that you will need to know.
30% Rule
So, what is the 30% rule? The 30% rule is a guideline used to help people determine how much they should spend on rent. The general guideline for this rule is that you shouldn’t spend more than 30% of your income on rent. Let’s look at an example of this:
If your income is: $50,000.
Take: 50,000 x .30 = 15,000.
Divide 15,000 by 12 (each month of the year)
That would equal $1,250.
Based on the 30% rule, a person with an annual income of $50,000 should spend no more than $1,250 a month on rent.
This is a good, general rule of thumb to look at before searching for a home to rent, but it doesn’t factor in other costs that go into daily life or non-rent purchases.
50/30/20 Rule
The 50/30/20 rule is a lifestyle budget guide for managing expenses. The rule, as opposed to the 30% rule, allows for other monetary factors to be included when trying to create a renting budget. However, this rule doesn’t specifically look at rent, but at “needs” as a whole (which would include rent). This is how this budget rule is laid out:
- 50%- Needs
- 30%- Wants
- 20%- Savings
These two rules are good basics to research when creating a renting budget and both can be used together or separate, but offer different things. The 30% rule is tied very specifically to understanding how much you should spend on rent whereas the 50/30/20 rule is more for a basic budget.
Other Costs (Non-Rent)
While it is, of course, necessary to break down and understand your specific budget for rent, it is also necessary to look at monetary factors that play an equally important role in your monthly costs for a home. This is important because knowing how much you’re going to spend on other monthly payments can affect whether or not you can afford rent. These other factors can include:
- Utilities
- Insurance
- Groceries
- Public Transportation/ Car
- Wifi/ Television
Rent Costs in Chicago
Chicago, with its historic architecture, abundant job opportunities, and a vast array of cultures, is one of the best cities to live in. It is, however, also one of the most expensive. Chicago is divided into 77 different community neighborhoods that offer different apartment types, restaurants, and views. Rent won’t look the same in Bronzeville as it does in Pilsen, Gold Cost, or Rogers Park. It would take multiple articles to go through a rent in every one of those neighborhoods, so we are just going to look at a few different neighborhoods that are on the north side. Below, we will look at rent pricing in Lakeview, Lincoln Square, and Rogers Park and compare these popular north side neighborhoods.
What is Considered Expensive Rent?
Now that we’ve looked at how to find out what rent amount works for you, let’s look at what is considered expensive. The truth is, there’s no real way to know. Yes, obviously, $9,000 a month is generally considered expensive, but there are people who find that reasonable. The reason there’s no way to know is because how much you can spend on rent is entirely personal and will vary for everyone based on their individual salaries. The reason why we chose to include the “rent rules” above is so you, specifically, know how much you can afford. Anything higher than that is considered expensive rent.
Below, we will go into a few different North Side neighborhoods and include great rental properties for each!
Renting in Lincoln Square
Lincoln Square is a neighborhood on the northwest side of Chicago and, similarly to Rogers Park, offers a very quaint, young family feel. It also has an extensive restaurant and shopping center in the main center of Lincoln Square. Rent here can be moderate to expensive.
Ask us about our Lincoln Square rental property:
Renting in Lakeview
Lakeview is a northside neighborhood nestled between Uptown and Lincoln Park and houses many attractions including Wrigley Field. Lakeview has multiple sections within the neighborhood that can affect rent prices. Generally, Lakeview is moderate to expensive.
Ask us about our Lakeview rental property:
How SRE Holdings Can Help You!
At SRE Holdings, we know and love Chicago and are here to help you find a great rental property that fits your individual budget! We believe that finding an apartment should be stress-free, personalized, and available for everyone. Contact us today for information on our rental properties or questions that we can help answer!
