By Raúl Rodríguez Cota
Nov 27, 2023, 18:18 PM EST
In today’s complicated financial world, housing choice plays a fundamental role in balancing our personal finances. Luckily, to help you make more informed decisions about the cost of rent, there is the concept of ’40 times the rent’.
In other words, according to this idea, it is recommended that your total annual salary be about 40 times the amount you pay monthly for rent.
For example, if you earn $50,000 a year before taxes, this rule indicates that your monthly income should not exceed $1,250.
How do you get to this? Dividing your annual salary by 40, resulting in a monthly limit of $1,250 to maintain balance in your finances.
The theory is simple: spending more than 2.5% of your income on housing could put too much financial pressure on you, making it difficult for you to afford other essential expenses.
Below, we share a list of the rental price that you should pay per month depending on your annual salary:
If you earn less than $100,000:
- $10,000 salary: $250 rent
- $20,000 salary: $500 rent
- $30,000 salary: $750 rent
- $40,000 salary: $1,000 rent
- $50,000 salary: $1,250 rent
- $60,000 salary: $1,500 rent
- $70,000 salary: $1,750 rent
- $80,000 salary: $2,000 rent
- $90,000 salary: $2,250 rent
If you earn $100,000 or more:
- $100,000 salary: $2,500 rent
- $110,000 salary: $2,750 rent
- $120,000 salary: $3,000 rent
- $130,000 salary: $3,250 rent
- $140,000 salary: $3,500 rent
- $150,000 salary: $3,750 rent
- $160,000 salary: $4,000 rent
- $170,000 salary: $4,250 rent
- $180,000 salary: $4,500 rent
- $190,000 salary: $4,750 rent
- $200,000 salary: $5,000 rent
By making sure your annual salary is at least 40 times your monthly rent, you’ll likely keep your rent around 30% of your gross income.
This percentage is recommended by experts for housing costs, allowing you enough room in your budget to cover other needs such as food, transportation and savings.
Following this rule helps you maintain a balanced budget without stretching your finances to the limit.
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