Generally speaking, people on $60K per year can afford rent of about $1,500 to $1,750 per month. However, for many of us, it’s not that simple. Where you live, how many people depend on you, and any additional charges could change how much you can feasibly afford.
Let’s face it – rent takes a lot out of our paychecks. There are all kinds of other payments to think about, too – but to keep a roof over your head, it’s important to prioritize rent.
I’ll take you through some of the biggest factors impacting your rent potential below.
Rent budgeting calculator
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The calculator is fairly simple to use, but here are a few quick pointers:
- Enter your pre-tax monthly income, also otherwise known as your monthly gross income.
- Optionally, enter a target percentage of your income that you want to spend on rent. We’ve already set it at 30% based on typical values. Feel free to change based on your preferences.
How much of my income should I spend on rent?
General advice suggests that rent should ideally be a maximum of 25% to 30% of your monthly income. But, this isn’t a hard and fast rule, as you can stretch it to 35% if you live in a high cost-of-living area. Mathematically, anything above this share is likely too expensive and might affect your financial stability.
Ideally, it’s worth having enough money for your common expenses, savings, and even a bit left over for a rainy day. On a salary of $60K a year, you could viably spend about $1,500 on rent before taxes and a maximum of $1,750 before feeling any discomfort.
Of course, it’s important to remember that what experts say is a very general idea – one size never fits all! This percentage won’t suit everyone, especially as we all have different living situations and expectations.
Before committing to any rent, consider all of the other demands you have on your income and how they can affect what you actually have left over for monthly housing.
What affects how much rent I can pay?
Regular expenses, location, taxes… all dictate how much rent you may or may not be able to afford. Here’s a quick breakdown.
Although rent may seem like the most important demand on your income, it’s probably sharing that accolade. Consider regular necessary expenses such as general bills (water, electricity, phone, WiFi, car payments, travel, food, etc.).
Beyond that, look at all those payments that stack up over time, but which aren’t always necessary. These might include spending on eating out, shopping, vacations, and subscriptions (streaming websites, gaming, gyms, and so on).
It’s worth considering your savings, too. Some experts suggest at least 20% of your net income (income after paying income taxes) should go on paying off any debt you may have or transferring into savings. You never know when you might need them!
Again, 20% isn’t a hard and fast rule. If you don’t have any pressing debts, try and save what you can. That’s after rent, of course, as you don’t want to risk being homeless!
Taxes to pay
When you first see the big $60K on your salary sheet, it’s easy to get excited. Sadly, though, your mood might swiftly change when you see just how much tax takes away from your final paycheck.
If you’re a young adult with no dependents, you may not even realize how much is taken away from your salary on tax. Of course, people with children or family members in their care have lower tax rates, but remember that your personal expenses will be higher, so the money you may gain may go straight back out.
Taxes are complicated, whatever your situation, so you must understand exactly what you owe before deciding what you can afford to pay on rent. Yes – I’m afraid that does mean deep diving into what the IRS expects of you.
The state you live in
Rent costs vary massively up and down the US. Not only does the price of rent vary greatly depending on the state, but so do other expenses (such as groceries, transport, water, etc.).
For example, according to Earnest.com, California is the most expensive state to live in, with Los Angeles as the most expensive city for rent. The average rent in LA is about $2,600 per month.
However, if you’re looking for a cheaper place to stay, you can start with Toledo, Ohio. It is the least expensive city in the US to rent in, costing an average of $550 each month.
Therefore, $60K probably goes a little further in Toledo – it’s worth looking into the cost of living per state if you’re thinking of moving.
Your local housing market
The current state of the housing market in your area will also greatly affect your rent. As with rent, housing costs vary from state to state. They will also vary depending on the city or town in the state. For example, renting a place in New York City will be much more expensive than somewhere on the outskirts.
Therefore, it’s always a good idea to check the current prices of homes in your area, as it will directly affect the prices of rent. If the area is in high-demand, house prices will rise, and so too will rent.
Moving and added rental expenses
When renting somewhere new, you don’t just have to pay the monthly costs. You also have to consider moving expenses. How much you pay will depend on
- How many people are moving
- How far you’re traveling
- What you’re transporting
- Whether or not you need to furnish your new place
Also consider added renting expenses such as the security deposit, the last month’s rent, the potential for overlap between your previous rent and new rental (last and first month).
Another factor that can impact how much rent you can afford is also dependent on what requirements the landlord might have for minimum income thresholds and with regards to income verification. Some landlords use a three times rule, which requires the tenant to have a verifiable income that is at least 3x the monthly rent. So you could end up in a situation where your other expenses are low and you could afford an apartment that costs $2,000 per month but the landlord may not approve you because it does not meet the 3x requirement.
Ready to Buy a Home?
Hopefully you found this article useful.
If you however feel that you’re done renting and that you’re ready to buy a home of your own, you may want to check out the article that is specifically written for you: Can I buy a $300k home on a salary of $60,000?
We’ve got lots of help for you in the form of a mortgage calculator and even home affordability calculator. These calculators will help you fine tune your home hunting process. If you’ve got other loans outstanding, you may want to consider paying those off as rapidly as possible. Check out the loan payment calculator to understand how much it would take to pay off your loans ASAP!
How much rent can I afford on $100k?
You’re receiving a gross of $8,330 a month on a $100k salary, which means you’ll likely be able to afford $2,500 each month in rent. However, you’ll need to account for other expenses.
How much rent can I afford on a $50k salary?
You’re receiving a gross of $4,167 a month on a $50k salary, which means you’ll probably be able to afford $1,250 each month in rent. However, you’ll need to account for other expenses.
How much should my rent cost me?
Experts suggest that you should use a 30% rule to measure rent costs. However, this doesn’t always work out so smoothly in practice! Budget carefully and ensure your essentials are covered.
Is 50% on rent too much?
Yes, 50% spent on rent is too high. You have to remember that usually the gross salary (before tax salary) is used to calculate this measure, so you will have to first account for income tax. After that you need money to buy groceries, pay for utilities, and other important payments like insurance, cars, debt, etc. I would suggest limiting yourself to 35% of income as the highest.
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.