Searching for a new apartment is the most exciting aspect of the moving process. As you start searching for apartment rentals in Ottawa, you may find yourself dreaming of extra bedrooms and amenities like granite countertops and walk-in closets.
Unfortunately, all those extras add up and before you know it, you’re paying way more for an apartment than you can actually afford.
Before you sign your next lease, make sure you know exactly what you can afford by following these tips.
Do the Math
The first step in determining exactly what you can afford is to do the math. In general, it’s recommended that your rent should cost around 30 percent of your income. It’s easier than ever to do the math with an online rent calculator.
Before you get too excited about the number that pops up on your screen, make sure that you’re entering your take-home pay. If you’re dealing with hefty taxes or withholdings, you don’t want to include them in your calculations because that’s money you can’t use to pay for your apartment.
Establish a Budget You’re Comfortable With
Taking 30 percent of your income sounds simple enough, but your job isn’t done once you’ve come up with that magic number. It will need a little tweaking so that you’re actually comfortable paying your monthly rent amount.
Do you want to spend 30 percent of your income on rent? Or would you rather do something else with your money? Here are a few reasons why you might want to reduce your rental amount:
- Save extra for retirement
- Save for school
- Travel more
- Build your savings
- Pay for activities for the kids
You may find that although you can technically spend 30 percent of your income on rent, you would feel more comfortable spending 20 or 25 percent of your income on rent instead.
The opposite could also be true. You may realize that you’re willing to pay 35 or 40 percent of your income so that you can live in your dream apartment.
Consider Additional Costs
It’s not just about your comfort. There are plenty of other costs you need to take into account when determining exactly how much apartment you can actually afford.
You have to consider your bills, especially the bills associated with your new apartment. For example, if you’re moving into a bigger space, you can expect that your electric bill will be higher than you’re used to.
Another important consideration that’s sometimes overlooked is renters insurance. Not only does it protect you from theft, it protects you from damage to your belongings. That’s important because you never know when your upstairs neighbors is accidentally going to flood your apartment.
At the end of the day, determining exactly what you can pay in rent comes down to creating an itemized list of your monthly costs. If you use these tips to understand every detail of your budget, you can rest easy knowing that you and your family can easily afford your new apartment.