1. What is the Rent Affordability Rule?

The 30% rule is a common guideline that suggests you should spend no more than 30% of your gross monthly income on rent. This helps ensure you have enough money left for other expenses and savings.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Monthly Income — Your total gross income before taxes
• 0.3 — The 30% affordability threshold

Explanation: This calculation gives you the maximum recommended amount you should spend on rent each month.

3. Importance of Rent Affordability

Details: Maintaining this 30% threshold helps prevent being "house poor" where too much of your income goes toward housing, leaving little for other necessities or savings.

4. Using the Calculator

Tips: Enter your total monthly income before taxes. The calculator will show the maximum recommended rent amount based on the 30% rule.

5. Frequently Asked Questions (FAQ)

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

Q2: What if my rent exceeds 30% of my income?
A: You may need to adjust other expenses, find roommates, or look for more affordable housing options.

Q3: Does this include utilities?
A: The 30% typically refers to rent only. Some recommend keeping rent + utilities under 30-35% of income.

Q4: Is this rule realistic in high-cost areas?
A: In expensive cities, many people exceed this guideline, but it's still a good target to aim for.

Q5: Should I include bonuses in my monthly income?
A: Only include regular, predictable income. Bonuses or irregular income shouldn't be counted toward this calculation.