If you’re like the one-third of Aussies who rent, you might be wondering – how much rent should I be paying? Here’s some tips to work out what you can afford and ways to avoid rental stress.
In December 2021, Domain reported the average weekly cost of rent in Australia’s major cities as $499 for a house and $436 for a unit. But depending on where you live in Australia, the average weekly cost of rent as well as how much income goes towards your rent differs quite a bit:
Source: Savings.com.au. These values are updated regularly, so check out the Savings.com.au website for the most up-to-date figures.
However, the average rent prices and average proportion of income spent on rent aren’t necessarily the right numbers to base your spending on. To figure out how much cash you should be spending on rent, try using one of these rent-to-income ratios.
The first one is the 30% rule. That’s where you spend no more than 30% of your income on rent. So, if you’re earning $1,000 a week, you’d want to spend $300 or less on rent. Pretty simple, right?
The other one is the 50/30/20 trick. If you’re earning $1,000 a week for example, $500 would go to essentials like rent, food and bills. $300 would be for fun stuff like dinner with mates, a gym membership or a new outfit. Then the last $200 would be for your savings. To help you stick to the 50/30/20 rule, you can open up to 10 Save accounts with ubank and divide your income more easily.
If you’re spending more than 30% of your income on rent, you could be in rental stress. While you might not have full control over the amount of rent you pay, here’s some ways to lighten your load.
If your rent is still more than 30% of your income, here’s some other ways to save around the house:
And if you can afford it, don’t rule out buying your own property. There are pros and cons of renting and buying property, but buying a property ultimately means you are contributing to your own mortgage and building equity instead of helping your landlord pay off their mortgage with your rent.
Ultimately, how much you spend on rent is up to you. Use a rent-to-income ratio to figure out what you can afford and if you’re still feeling the pinch, our savings tips could help you avoid rental stress. Once your budget is sorted, it’s time to decorate and make your house feel like a home.