How much of your salary should you spend on rent?

A report published in the year 2018 stated that 28% of Urban India lives in rented accommodation. Usually salaried employees have a monthly budget to stick to, they plan out in advance how they will spend their money. When it comes to renting an apartment, there are budget constraints, utility bill payments, daily expenses and miscellaneous expenses. So a common question which arises is how much of your salary should you spend on rent? I will be sharing my viewpoints with you on the same.

How much of your salary should go to rent?

Let us understand this with an example. 

Suppose you have a rented apartment in Mumbai for which you are required to pay Rs. 17500 as rent monthly. Your total earnings are Rs. 50,000 p.m. Apart from the rent, you have to pay for water bills, electricity bills, wifi, groceries, etc. all of this amounts to approximately Rs. 15000 a month. You will be left with Rs. 17500 out of which you have to keep aside savings and look out for your daily commutation needs. Wouldn’t that be a stressful situation?

Financial experts say, you should spend just about 30% of your salary in rent and utility expenses. Therefore, going by that logic, if you earn Rs. 50000, you should spend Rs. 15000 barely. 

Of course, you can best understand your needs and circumstances to decide the percentage you are willing to pay. But I would suggest every individual wondering how much rent should I pay based on my salary, to make a wise decision and make accommodating decisions for a better financial future.

If you are unsure if the rent asked by the property owner is legit or not, you can check out NoBroker Rentometer.

Just enter your location, building or apartment details and you will know how much rent you should pay. 

I hope this answer was helpful.

I think the cost of living is disproportionately affected by expensive rental housing. In a metro city, rent for housing often accounts for half of the income of a household. But what percentage of salary should be rent India? As far as I know, the monthly rent and utilities expenditures shouldn't be more than 30% of the net take-home pay.

What Percentage of Income Should Go To Rent?

For many families, the majority of their monthly income goes towards housing rent.

• According to experts, the monthly rent and utilities expenditures shouldn't be more than 30% of the net take-home pay.
• When estimating the rental outgo, most people forget to factor in the cost of utilities like power and water.
• Ideally, you shouldn't be paying more than ₹21,000 in rent if your net monthly income is Rs 70,000.

Now that you know how much rent should I pay for my salary, I will tell you how you can regulate your rent.

• Rent can be regulated, but utility expenditures cannot be decreased further.
• Rental prices differ throughout localities within a city. Nonetheless, one should account for the cost of transit as well as the time lost during the commute.
• The 30% cap can be loosened if paying a little bit more rent allows you to save a significant amount of money on transport expenses.
• Wealth accumulation, tax planning, spending planning, and retirement planning are some of the components of financial planning.
• One important component of tax preparation is the house rent allowance. Section 10 (13A) of the Income Tax Act, 1961 allows you to claim a tax exemption if you live in a rented home and receive HRA.

Now you know what percentage of salary should be rent India. Pay Your Rent Through NoBroker And Earn Rewards and Cashbacks. Read More: How Much Rent can be Paid in Cash: Legal Guidelines in India?