Rent is one of the most important items of the personal or family budget; it’s common for it to be the most onerous expenditure of each month.

Rent is one of the most important items of the personal or family budget; it’s common for it to be the most onerous expenditure of each month.

In order to calculate the money that should be destined for housing payment, we need to take a look at our numbers and make rational decisions.

First, we need to calibrate the rental budget from our own income. The golden rule advises not to allocate more than 30% of monthly income, although this omits the variable of the particular expenses of each person if it is taken without context.

Since this amount will also depend on the level of debt and other expenses, it’s important to list first all payment commitments acquired, including those of credit cards, whose high-interest rates make them peculiarly dangerous.

In regards to the features of the house, we must consider its location, since the proximity to work or schools can minimize or increase some complementary costs; if the property is also part of an association or condominium, we will surely face extra monthly installments; finally, to avoid waste, it is convenient to adjust the size of the building to our plans and real needs.

Let’s not forget that personal finances must be taken as a whole. In other words, before you make a decision, it’s worth that you integrate your home investment into a plan that includes such important issues as emergency funds and retirement. The issue is not to lose focus on our short and long-term financial goals.

In conclusion, there is no absolute parameter for rental cost. Budgeting is essential to set goals and priorities but, above all, so the monetary outflows like this do not exceed the inflows.

At the end of the day, if doubts about budget distribution overwhelm us, we can set foot on land with the formula “50/30/20”, so recommended by the experts:

• 50% in fixed costs: rent, services and transport
• 30% in daily expenses: entertainment, outings, shopping and miscellaneous
• 20% on financial goals: debt, insurance, emergency fund and retirement