Setting and following a budget is a financial necessity for many people. Anyone who’s renting an apartment may be doing so to reach long-term goals such as buying a house, taking a trip, or starting a family. People can improve their financial situation, regardless of their situation, by developing and sticking with a budget.
Below is a guide to help renters make a budget and some budgeting tips to help you stay with it.
A budget will help you manage your money by keeping track of your income and expenses. There are different ways to create a budget, each with its own benefits. A good rule of thumb when setting a rental housing budget is to allocate about 30% of your gross monthly income for rent. You may find you have to spend as much as 50% of your income on rent, but it’s best to stay as close to the 30% mark as you can.
3 Ways to Create a Budget
There are many methods one can use to create a monthly budget. Each serves the same purpose: to help you manage your money so you can achieve your financial goals. Here are a few methods to try:
This is perhaps the most common way of budgeting. It involves listing each category you spend money on (rent, utilities, groceries, entertainment, etc.) and calculating how much you spend on each one. Looking at all your categories in one place can help you figure out if you’re spending more on one area than you should.
The 50/20/30 budget suggests you spend no more than 50% of your income on essentials, which includes housing, utilities, groceries, transportation, medications, and insurance. Another 20% of your income should go to savings, while the final 30% can be spent on non-essentials such as hobbies, entertainment, and dining out. The 50/20/30 rule can be an easy and convenient way to manage your money, as it’s less in-depth than the line-item budget.
The 60% budget method might be right for you if the others seem too time-consuming. The concept is straightforward: 60% of your income should go toward necessities such as housing and groceries, while the remaining 40% can be divided up into smaller categories and allocated as you see fit. Perhaps you’ll put some of it into savings or use some of it for an upcoming trip or special occasion.
There’s no wrong choice here, but try to stick with whatever budget method you choose. Creating a budget is a great first step, but the real work comes in holding yourself accountable month after month.
Budgeting Tips for Renters
There are several things you can do to save yourself money and stay on track financially. Managing your money efficiently can give you the assurance of knowing that you’ll be able to make that rent payment every month. Here are a few budgeting tips to try:
Consider a Roommate
Adding a roommate can significantly reduce not only your rent but also your utility bills. Having someone to share costs with will allow you to save more of your money, which can be helpful if you’re gearing up for a big expense such as a down payment on a house or buying a car. Be sure to check with your landlord about the roommate policy; you’ll want to add any roommates to your lease so they can share in the rights and responsibilities of renting the apartment.
Set Up Auto-Payments
It can be hard to remember the due dates of all your individual bills and make sure they’re all paid on time. Setting up auto payments can take some of that pressure off. You’ll have peace of mind knowing each bill will be paid on time, and you’ll avoid any potential late fees. Setting up auto-pay for your rent is especially important because late rent fees can be high. Talk to your landlord if they are not already set up to accept automatic payments.
Track Your Budget Regularly
Just because you’ve set a budget doesn’t necessarily mean you’ll stick to it every month. It’s easy to overspend if you’re not careful. Make sure you’re checking up on yourself from time to time and that your funds are being allocated as you set forth in your budget. It may be worth rethinking how you’re dividing up your money if you find yourself consistently spending more in one area.
Pay Your Savings Account Like It’s a Bill
Regularly adding to your savings account is a great way to make sure you’re on target with your financial goals. Paying your savings account every month as if it were a bill will help make it a regular habit instead of an occasional occurrence. Pay yourself at the beginning of the month rather than waiting until the end of the month when you might come up short.
Cushion Your Budget to Allow for the Unexpected
Life isn’t always predictable, so your budget needs might vary from month to month. You won’t have any wiggle room for unexpected costs if you’re spending everything that comes in. Consider creating a “miscellaneous” or “special occasion” category in your budget to allow for spontaneous moments or unanticipated expenses.
Creating and sticking to a budget is an achievement, so don’t forget to reward yourself. It can be good motivation if you treat yourself occasionally for staying under budget. Dinner with friends or a massage are good ways to relax without breaking the bank.
Apartment Renting in Washington, D.C.
Setting a budget is one of the best ways to help you achieve your financial goals, especially as an apartment renter. Anyone looking to rent an apartment in the Washington, D.C., area, should consider The Vintage on 16th.
Our amenity-rich community blends city sophistication with suburban culture, and we offer a range of floor plans to suit a variety of needs and budgets. Contact The Vintage on 16th to speak with a leasing agent about available apartment homes.