How much should we spend on Rent?
Feb 7, 2021 20:30 · 289 words · 2 minute read
We’re skimming the market for a new flat currently. Not looking to move immediately - we just want to get a feeling about the market and our priorities. What is nice to have for us? What is a must have? Do we need a balcony? How important is the location/ area? Is an open kitchen or a balcony more important? Which tradeoffs can we make? Etc.
So of course one important question came up: how much should be spend on rent?
I know the 30% rule which means don’t spend more than 30% of your disposable/net income on rent.
I also found a study on housing costs in Austria which states
that almost 2/3 of tenants in Austria spend 20% or more on rent.
The real issue is that we currently spend less than 10% for rent. A very nice and low rate. And flats we are keeping an eye on would kick our rental rate up to 21%-32% (depending on utilities and if you count the monthly or average salary). So probably a lot of people would just say do it as we would obey the 30% rule easily. However, the jump from <10% to about 30% of our monthly budget has a big impact on our savings rate and is - at least for me personally - a big mental hurdle. Otherwise, I’m aware that we saved a lot of money due to such a low rental rate during the last years Plus, with growing salaries in the future it would likely soon drop below 30% again.
So, long story short: I’ll probably have to say goodbye to the idea of spending less than 10% on rent, since we probably won’t have any other option left anyway