Rent To Income Ratio Calculators

What Your Rent to Income Ratio Should Be

 As you can clearly guess by reading the title, rent to income ratio is how much a person is making their monthly income based on what he is paying for the rent of his place. The foremost advantage of this ratio is that both the renters and the house owners get the idea about how much you the renters tend to pay and how the tenants can manage their finances. Therefore, it is essential to know what your rent to income ratio should be.

30% rule:

It is the most useful and more searched method that we implement globally. The 30% rule says that your rent solely should not exceed 30% of your overall monthly income. In this 30% of your income, utilities and other expenses do not include, and this part of your income is fixed, particularly for your rent every month. It gives you a clear picture of what you should be spending on. Cut out your extra expenses and those luxuries that are far from your basic survival needs. It is usually a great tool for the budgeting of your individual or family expenses over savings.

The most common rule for budgeting after cutting this 30% income is 50/30/20. In this proportion, we divide our total gross earning into three parts. According to that, 50% of it we use for our necessities, including food, housing, and other basic use expenses. 30% for our outing and other entertainment stuff, and the remaining 20% goes to our savings.

Now, if you are spending already too much on your rent to have an extravagant and lavish house, you will end up having either no money for your entertainment or will have to sacrifice your savings.