The whiplash a young professional gets when they catapult from the codependent - independence of being a college student on mom and dad’s bankroll to paying every single bill on their own is staggering. Realizing how many things there are to pay for is half the battle. Cell phone bills, car payments, car insurance, health insurance, cable and internet plans, utilities, renter’s insurance, and the big one, RENT. Everyone who is at least two days older than me has made it emphatically clear that when it comes to rent, young people should hold on to their hats. The stress that comes from these comments is unstoppable.
Let’s get this stress under control!
The young renter has completely changed how apartments do business. For the first time, an entire generation of renters has decided to sacrifice square footage in the pursuit of savings. While this seems like the obvious choice, Forbes magazine tells us that in the past five years construction and rentals of studios and one-bedroom apartments have increased by 10%. This increase is a direct result of Gen Z and millennials who are delaying marriage and children and who value savings over the luxury of space more than previous generations. So remember when you’re shopping that YOU drive this industry.
So, How Do You Figure Out How Much Rent You Can Afford?
When it comes to what you can afford, many sources have different variations of the same calculations. The bottom line that seems to be consistent across all fields is that your rent should be no more than one-fourth of your monthly paycheck. If your monthly pay is $4000, you should only spend around $1000 on rent.
Myfirstapartment.com has a useful rent calculator that bases your estimates on how often you’re paid, not only how much you’re paid. The best part of this calculator is that it assumes your utilities will be 20% of your rent (a semi-extreme figure, but realistic in a city like Atlanta), thus calculating those pesky utility charges as well. If we use the $4,000 a month figure again, this calculator gives us an affordable monthly rent of $1,400 + an estimated $280 for utilities making the max we can spend $1,680.
This is the tricky part. Now it’s time to factor in any other bills you have; your car, your phone, student loans, etc. The best way to do this is to track your miscellaneous and day-to-day spending for as many months as possible BEFORE you take the leap out on your own; doing this can show you how much you need in your pocket after all your bills.
Day-to-day spending refers to things like groceries, gas, hobbies, and socializing. If you’re in more of a hurry and cannot track it as you go, go back and look at your previous bank statements and receipts. Once you factor that average monthly spending, create this equation:
Monthly Income - (monthly spending + monthly additional bill payments + portion for savings) = Max amount for rent + utilities
Please remember, you don’t have to spend your maximum amount. You shouldn't spend your maximum amount. Finding the fine line between the quality of the apartment you want and how much money you have is something that can only be decided by you.
As shown above, it is very easy for a first-time renter only to see the rent price and forget about extra charges like technology packages, utilities, city fees, and other amenity fees.
This is one of the single best things about Camden apartments: the consolidated bill. Rent, technology, utilities, and city fees are calculated into one easy-to-manage bill that can be paid online. At my home in Camden Fourth Ward, the only outside bill I pay is for electricity. It is a game changer in the management of my home and my finances.
As you go forward in your apartment search, remember this: you’re in control. It is scary, but it’s true. This is your money, and soon it’ll be your home, so make it work for you. Happy calculating and may the best rent win!