1. What is the Rent Affordability Rule?

The general rule of thumb is that your monthly rent should not exceed 30% of your gross monthly income. This helps ensure you have enough money left for other expenses and savings.

2. How Does the Calculator Work?

The calculator uses the standard rent affordability formula:

Where:

• \( Rent \) — Affordable monthly rent payment
• \( Income \) — Your gross monthly income before taxes
• \( 0.3 \) — The 30% affordability threshold

Explanation: This calculation provides a guideline for how much you can afford to spend on rent while maintaining financial stability.

3. Importance of Rent Calculation

Details: Calculating affordable rent helps prevent being "house poor" (spending too much on housing) and ensures you can cover other living expenses, savings, and discretionary spending.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes) in your local currency. The calculator will show the maximum recommended rent based on the 30% rule.

5. Frequently Asked Questions (FAQ)

Q1: Is the 30% rule before or after taxes?
A: The 30% rule typically uses gross income (before taxes), though some prefer to calculate based on net income.

Q2: What if I have significant debt payments?
A: If you have high debt payments, you may need to spend less than 30% on rent to maintain financial health.

Q3: Does this include utilities?
A: The 30% typically refers to base rent only. You may want to budget an additional 5-10% for utilities.

Q4: Is this rule different in high-cost areas?
A: In very expensive cities, people often spend more than 30%, but this can lead to financial strain.

Q5: Should I include bonuses in my income?
A: Only include regular, guaranteed income. Don't include one-time or variable income sources.