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Renters: Read This to Save Money Before You Sign the Lease!

roommates hanging out
Here’s how to tally all your expenses to determine your rent budget.

Not sure exactly how much you should be spending on rent each month? Most financial experts recommend that rent and utilities should be no more than 30% to 40% of your household income.

But how do you effectively figure out what that number is and how to budget the rest of your expenses if you decide you absolutely need that fancy apartment downtown? We’ve got the scoop.

1. Calculate your rental budget before you sign

When you’re out on the hunt, it’s easy to lose sight of what you can comfortably spend when you’re standing in a beautiful apartment that’s on the tiptop of your budget.

Before you’re swept away by an apartment’s location and good looks, it’s important to evaluate whether your bank account will support a signature on the dotted line of your lease. To get the best estimate for your income and lifestyle, follow these four steps:

Factor in your monthly income

Be sure to start with the net amount (minus taxes or employer health care deductions). A good rule of thumb is that your combined household income should be at least three times your monthly rent; Trulia displays a recommended income within the details of each apartment listing.

Add in monthly debt payments

Factor in the big fixed ones, such as car payments and student loans, but don’t skip over the ones that seem like a moving target.

Instead, come up with an average monthly payment for debts with variable amounts throughout the year, such as credit card payments. (And keep that number in mind throughout the year as you spend!)

Combine with monthly expenses

Yes, this includes basic stuff like groceries, haircuts, and Netflix. Track your spending for a month to get a firm grasp on broad-stroke budget items such as “entertainment” — you may be surprised to find you’re spending more than you would have guessed.

Balance against payment type or tolerance (conservative, moderate, or high)

Consider your comfort level when it comes to savings. As a renter, you won’t be responsible for regular home maintenance, but if your golden retriever ruins the carpet in the bedroom — or you’re saving up for a down payment on a home of your own — you might want a less expensive apartment so that you can stash away cash for emergencies or savings.

Just know that even if you live in an expensive market, there are many ways to save money.

2. Share rental costs

The possibilities are practically endless. Split your rental payments with roommates — you can still have roomies if you’re married!

And it’s not just the rent that can be trimmed by splitting it three or four ways instead of two. Shared grocery bills and cooking responsibilities make for even more cost savings. Give every roommate one night a week to be responsible for dinner — everyone can pitch in (and share the leftovers too).

3. Negotiate upfront

Once you know exactly what you can afford, try negotiating with your prospective landlord before you sign a lease. Get creative! Maybe you can take over basic maintenance tasks (mowing the lawn, for example) or sign a longer lease in exchange for a lower monthly payment.

4. Consider the ’burbs

Forget living in a city’s center and opt for a nearby suburb instead — commuting costs are likely to be less than the added cost of a downtown apartment. To help you weigh your options, Trulia rental listings include a commute-time feature, which lets you plug in an address to see average commutes from a prospective new place by car, public transit, or even walking.

5. Pay attention to utilities

Even in the smallest apartments, utilities can represent a significant portion of your monthly budget. Pay attention to ways you can reduce your carbon footprint — and save money too. Turn off lights when you leave a room, open a window instead of using air conditioning, and get a few extra blankets for the winter — it all adds up.