This post is sponsored by Lexington Law, thank you for supporting brands who support T20S. As always, all thoughts, opinions, experiences, and advice are my own.
When I moved to San Francisco, I knew I would be changing my world from what was normal in North Carolina. Moving to the land of techies, hills and memories from “The Princess Diaries”, was anything close to the southern farmland I was used to back home. I always heard California was expensive, but there was one aspect of the increase that I completely overlooked when moving out to SF – the rent prices! In this post, we’re going to learn how to budget when your rent is high. I’m an expert!
Before moving to San Francisco (where rent prices are some of the highest in the country), I never knew the term ‘rent-poor’. It’s literally a term for someone who has to put all their money towards their rent – leaving next to nothing for a social life, clothes or even food.
In my first job, I made $45K and lived in a (shared) 500 square foot apartment where I paid $1,300 rent. This meant almost 1.5 of my 2/month paychecks ended up going to rent every month. If I did anything to enjoy my early twenties in this situation, it was to learn how to budget.
Before we dive in, I want to reiterate that I’m a full believer in enjoying your life as it pertains to budgeting and money. Everything in moderation, but let’s always figure out a way you can enjoy your life – even if your rent is super high!
5 Ways To Learn to Budget When Your Rent is High
Calculate Your Take Home Salary
If I had thought about my salary + rent situation critically before I moved to San Francisco, I would have come to this conclusion: With taxes, my take home salary might not allow me to have a huge social life!
The confusing part about salary, especially if you are new to the working world, is that you can’t simply take your salary divided 12 and figure out how much you’ll take home every month. With taxes, you likely make significantly less.
To figure out your take home salary, hop onto Google and look into your state taxes to understand what percentage of your salary you’ll keep every month.
In an ideal world, see if your rent is less than ⅓ of your monthly salary, this will help you save money and have room for social life.
Make An Emergency Fund
There may always be a point where something unexpected happens with a job, so it’s crucial you have an emergency fund so you can pay your rent. End all be all, you need a place to live, so I would start saving a little bit of money every month (even if its $100) for future emergencies.
When I was 22, I was laid off from my job and luckily – had an emergency fund. As we talked about earlier, I wasn’t make that much in the first place but had put money aside for occasions like this. This allowed me to take two months off work and really focus on finding a new role – without worrying about how I would pay rent.
If I were you, I’d start doing this immediately so you will be set for any future rent hiccups.
Put A Little Money Aside For Fun
If you life an expensive rent focused city, really be critical about what you want for your life when searching for an apartment. If your priority is having the perfect place to live so you can sit at home and relax on the weekend – absolutely budget more money for rent and living in the perfect place.
For me, I need to get out and be social, so there were many times in my life where my apartment situation was not perfect – and that’s ok. It was more important for me to have a social life – and put a little money aside for fun.
Think About Other expenses
Rent can often come with other expenses, i.e. security deposit, rent increases, etc. so make sure you are thinking fully about that. In SF, your rent can often increase once a year – so make sure you are always leaving for any unexpected monetary costs in advance.
Make Sure You’re Keeping An Eye on Your Long-Term Vision
For many of us, renting an apartment (and having to budget for rent) is not the long term vision. Maybe you want to buy a house one day – or move into a bigger apartment. So many of these long term housing costs will require you to have great finances – such as your credit score.
Even if you are renting now, you will really need to focus on your credit score while you budget for rent. Make sure you are using Lexington Law’s resources while you do so – it will really help you!
Even if you are living in an expensive city where rent is high (hellllo, San Francisco!), remember that it is completely possible to learn to budget for rent.
Are you living in a city where your rent is insanely high!? Comment below and share your budgeting tips!