How to Know if I'm Paying Too Much Rent

by Leigh Thompson

Rent is often the highest line item in your monthly budget. When looking for a new place, consider more than just the fixtures and layout. The cost of the unit should be on the top of your priority list. According to CBS News, your total rent payment should be approximately 25 percent of your take-home pay. Fox Business expands this number to 33 percent to 35 percent for housing expenses, including rent and utilities.

Assemble your paychecks for the past month. Add up your take-home pay for the month. Include any additional revenue streams such as dividends and rental income if applicable.

Multiple your take-home income by .25. The product of your calculation is approximately what your rent should equal.

Compare the two numbers. If your rent is higher, it's possible that you are paying too much in rent. According to Fox Business, you could increase your housing costs up to 40 percent of your income but at that point you are stretching your budget.

Create a spending plan. Experts at Daily Finance recommend following a 50-30-20 formula. Your budget allocates 50 percent of your income for fixed expenses including rent, utilities, groceries and car payments. The rest is split between discretionary income at 30 percent and savings at 20 percent.

Remove the leaks in your monetary flow. If you eliminate unnecessary expenses, you may allocate the money for those expenses toward rent, easing any financial burden.


  • Consider getting a roommate to share in the rental costs. Doing so frees up money but allows you to live in a nicer apartment.
  • CBS News recommends asking for a free month or two when you negotiate your lease.


  • Living beyond your means takes away your ability to save money for emergencies and retirement.

About the Author

Leigh Thompson began writing in 2007 and specializes in creating content for websites. She has been published online in various capacities. Thompson has an associate degree in information technology from the University of Kansas and is working on a bachelor's degree in business and personal finance.

Photo Credits

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