To rent an apartment or a house, you need a budget and this is precisely why there are some budgeting tips renters should never take for granted. The reason for this is simple – To rent an apartment, you need a plan and that is called budgeting.
Paying your rent does not happen once in a life, which is why you need to understand that paying your first rent should be considered the beginning of your financial plan and not the ultimate goal. To make it easier for you to plan the payment of your rent, we will highlight several budgeting tips renters need to take into cognizance. Below are a few ways you can go about it:
Keep Things Realistic
The golden rule when renting an apartment is to ensure that no more than 30% of your monthly salary is dedicated to paying rent. What this does is that it allows you to make financial plans for other crucial aspects of your life; especially necessities. For instance, the fact that you are renting an apartment doesn’t mean you’re no longer going to eat, commute to work, pay for your internet subscription or save for other emergencies that might come up.
Sticking to the plan might be quite challenging but it is rewarding if you can achieve it. For instance, it won’t make much sense if you are repaying a car loan and you begin to default on payment because you have to use a major portion of your salary to pay your rent. A conscious effort has to go into budgeting for your rent. If you save 30% of your salary for a year and it is not enough to renew your rent, then you need to ask yourself if you are being realistic with your plans.
In a situation where your options are really limited and you have to rent an apartment that gulps about 50% of your salary monthly, there’s a way out. What you need to do is to make a budget cut on some other things in order to achieve financial equilibrium. For instance, instead of driving and paying for parking space at work, consider using public transportation.
Make Adjustments in Your Spending Habits
Cutting back on your spending might not come across as a fun thing to do but it comes with loads of benefits. The truth is that if you find a way to separate the things you need from the things you want, what you’ll end up with is a growing list of things that you can do without.
Budgeting tips renters need to prioritize usually revolve around being able to make financial adjustments where necessary. For instance, instead of constantly renewing your membership at the gym, you can cancel it and adopt morning/evening runs into your workout regimen. You can also cut down on the frequency of your shopping and attend fewer parties where you are coerced into buying expensive fabrics.
Your goal here should be finding ways to save more of your salary after payday. Budgeting for your rent requires some level of sacrifice and discipline.
Set Up a Monthly Budget
It is not enough to simply draw up a monthly budget. The actual work lays in sticking with your plans and not getting distracted to the point of losing sight of your financial goals. This helps you cut down on impulsive spending. You should be disciplined enough to a point where you know precisely where your money is going because you can account for it.
You can set up a monthly budget based on what works for you but an example of what you can have is the 50/20/30 rule. If you go with this model, you are expected to spend 50% of your monthly salary on living essentials and save 20% of your income. The 30% left is what you can spend on whatever you like.
The idea of having 30% of your salary to yourself is really cool but there’s a little snag and this is the fact that keeping your living essentials within 50% of your salary is not an easy thing to do. In other words, It’s not easy keeping your rent, feeding, transportation and other essentials within 50% of your monthly earning.
When you are hunting for an apartment, you should put a conscious effort into getting an apartment that fits into the 50/20/30 monthly budget or any other formula you have come up with, which works for you.
Get a Roommate
Having a roommate helps you cut back on a lot of money you would have spent on paying your rent. However, if you have to get a roommate, you need to do it the right way, which is to ensure that the landlord is aware of your plan to add someone to the existing lease.
If you try to play a smart one on the landlord by bringing the roommate in through the back door, this could get you evicted especially if this negates the rental agreement. You should remember that your landlord has to screen your potential roommate the same way you were screened.
In a situation where the landlord decides to add something extra to the rent, the fraction would not hurt your plan to save more because your roommate would naturally take a large chunk of the financial burden of the rent off you. For instance, would you rather pay N500,000 for a 2-bedroom apartment or split this with a roommate by paying N300,000 or N250,000; depending on what both of you agree on.
Remember to spell out some ground rules to ensure both of you agree on how to coexist in peace. You can’t just assume that this person should know what to do and what not to do.
Cook at Home
When it comes to practical budgeting tips renters appreciate in relation to food, there are two kinds of people – Those who cook at home and those who eat out. It really doesn’t matter what you’re buying; whether it’s noodles and fried eggs from the Aboki across the road or dinner at a Chinese restaurant every other night, eating out is a more expensive option compared to cooking at home.
If you’re serious about drawing up a budgeting plan for your rent, then, it’s time you learned how to cook. If you already know how to cook, better for you. The goal here is to spend less on food outside the house.
Final Thoughts on Budgeting Tips Renters Should Adopt
Drawing up a budget is one thing and adhering to it is a different ball game entirely. You need to avoid distractions and conduct your financial affairs with this goal in mind.
If you clearly define your goal, it is easier to work towards it. For instance, your goal for the year can be to save up N800,000 for your next rent as well as paying N30,000 monthly towards repaying your car loan. If you have a family, your other goal might be to save N100,000 quarterly to pay your child’s tuition.
The urge to spend that extra money will always come but it’s up to you to look away and focus on the things that really matter to you.