Tuesday, May 13, 2014
Being on top of your finances is key to living a stable and debt-free life. Spending for your home, whether you’re making monthly mortgage payments or rental fees, is an important financial concern for most people. These payments can take up most of your budget.
When it comes to finances, renters have more flexibility than homeowners since they can just move to a less expensive rental property if they find themselves in a tight spot. However, that is not to say that renters can forego the budgeting process altogether. Having a rental budget will empower you to take control of your finances and help you save money. Get budgeting tips for renters.
Define your exact monthly net income. Net income varies from gross income in that the former already has the taxes, social security and other fees deducted from it, while the latter is your total salary. It’s important to base your budget on your net income, because this is the amount you’ll be left with once your fees are deducted.
Assess your monthly living costs. This may include utility bills, loan payments, insurance bills and tuition fees among others. These monthly expenses are usually not that flexible, so it’s important to establish a list of these necessities first.
Next, consider other basic expenses such as grocery costs, gym membership fees, household items, food, clothing, hobbies, etc. Be honest and realistic when determining how much you need to allot for these items.
Rental budget and savings
Once you’ve listed all your monthly expenses, you now have a rough idea of how much you can afford for rental fees. However, depending on your priorities, you may also want to set money aside for emergencies or retirement. Saving a little every month can go a long way over the years. When setting your rental budget, it’s important to factor in how much you want to save every month.
Renting a house or condo has several hidden costs. This may come in the form of homeowners association dues, redecorating your space and rent increases. Be sure to discuss these with the landlord before you sign the lease agreement. These hidden costs should be factored into your rental budget otherwise you run the risk of renting more than you can afford or dipping into your savings.