How much rent you can afford depends mainly on your net annual earnings. In addition, however, you should also take your other expenses into account, as everyone has a different standard of living. Ultimately, it is difficult to determine how high the rental costs should be. However, at least rules of thumb for choosing a maximum rental charge, which can provide a corresponding orientation. Under certain circumstances, however, you also entitle to government grants or social housing if it is not possible to get cheap housing that you can afford with your income.
40 rental rule
This rule assumes that the gross annual salary should be 40 times higher than the rent. If, for example, you earn 45,000 euros gross annually and then divide this by 40, you can afford 1,125 euros monthly rental expenses according to this calculation. Accordingly, the monthly rent with a gross annual salary of 20,000 euros should not be higher than 500 euros if possible. A disadvantage of this rule of thumb is that gross income use while rent is paying from net income. With this orientation, the personal expenses, which are very different, are not taken into account.
30 percent rent rule: How much rent can i afford
This possibility of calculation makes it possible to estimate the possible rent more precisely. The monthly rent should not be higher than 30 percent of the monthly net income. Let’s go back to the 45,000 gross. After-tax deductions and contributions for health insurance, pension, etc., there are still around 27,000 euros of this as a net annual salary (may vary depending on your situation). This then results in a net monthly income of 2,250 euros. After calculating the 30 percent share, there are still 675 euros that can use for the monthly rent. If, on the other hand, you earn 1,600 euros net, you can only spend 480 euros on the monthly rent according to this calculation. Other personal expenses are also not taken into account with this calculation method.
Rent: this is how you can calculate your monthly budget precisely
To find out the possible rent you can afford for your own life. It is still best to add up all monthly expenses and then subtract them from the monthly net income to determine the difference, which may still left over for the rent. With a monthly net gain of 2,250 euros and assuming 1,500 euros for other expenses, a rent-charge of 750 euros per month would be possible, for example. Even if this calculation is more complex, the result is more exact.
Attention: Remember that you should also save a certain amount every month. Therefore, you must consider this in the “expenses” and do not forget it, as otherwise. No assets can be built up if the monthly income can barely cover all costs.
Conclusion: How much rent can i afford
Ultimately, the rules of thumb are only a rough guide to how much rent you can afford. If you want to have a calculation that is as exact as possible, you should make a personal calculation of the expenses. You will achieve a specific financial security and planning level by intensively dealing with the likely rent burden. So you no longer have to worry that the rent burden could be too high in retrospect.
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