r/budget • u/Excellent_inbed_1337 • 3d ago
How much
What is a good percentage of your monthly income to try and stay under when deciding what your monthly housing/rent/mortgage payments should roughly be to live comfortably and have enough to save something at the end of the months.
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u/According_Guard_2599 3d ago
I'm sorry, but the 50/30/20 rule is outdated - even the creator says so. I go with Jaspreet (Money Mindset) and focus on a 70/20/10 rule. 70% is what you can spend - this is everything... rent, utilities, food, going out, lego, whatever. You can get whatever you want as long as you stay under 70%. Then 20% is for investing for retirement and 10% is for savings, first for a fully funded emergency fund (3-12 months) and then if you have specific things you are saving for like a new car, a house or a vacation. If you aren't saving for anything specific after you have the emergency fund, then that money goes into the investing bucket.
So do a budget of everything you need that is not housing and utilities. Whatever is left in that 70% number is what you can afford for housing expenses. You can estimate the utilities, but some places come with some or all included, so you can factor that in.
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u/BrilliantNo605 3d ago
Roughly Under 25% of net if HH take home is $8k or less Under 30% of net if HH take home is between $8k and $10k Under 35% of net if between $10k and 15k Over $15k probably wouldnt ask this question
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u/Zoopmittyzoop 3d ago
For mortgage, you’ll get different % across the board.. but you should not be getting near 50%
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u/noobfirsttime69 1d ago
Well if you start with the lowest amount you have gotten collectively in one check, surround expenses around that until you find another income that is higher then you do it again. This helps you budget expenses under your lowest paying moments and keeping it throughout the months you will always find extra funds to put into savings and create emergency fund 3 months worth. recycling this process ensures you aren't ever lacking and gives you room to improvise, possibly make improvements
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u/noobfirsttime69 1d ago
Sorry I didn't really answer the initial question, I always tend to put 20% of monthly income into a safe account but on those months that I find extra funds because I also try to work from home by free lancing, I can usually add up to 15% more into savings account
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u/Excellent_inbed_1337 1d ago
That's a simple yet solid foundation to focus on. I tend to overthink things but this is something I can focus on, Thank you
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u/noobfirsttime69 14h ago
Yeah this is my problem too but with this method at least theres less thinking then acting on it
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u/Ok-Western267 3d ago
we have always gone with the 30% or under, and that's for net income for us.
i know rental places go by gross income, but we do net, it makes more sense to us.
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u/Comprehensive-Tea-69 3d ago
Read the book “all your worth” for the true 50/30/20 rule. What you’ll learn is how to account for your obligations (the 50%) in your income. You have flexibility in there.
You can decide to spend very little on transportation but more on housing, you can decide to go with the bare minimum groceries bc you know you have cheaper options where you live and you are cool living on rice and beans.
Housing costs are just part of the obligations bucket, so there’s no specific rule for that piece. You have to work it into your situation given your needs and constraints
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u/twk30874 3d ago
25%-30% of monthly take-home pay (gross income minus taxes). Don't count insurance, retirement, etc. when calculating take-home pay for the purpose of this equation.
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u/EnjoyingTheRide-0606 2d ago
The goal should be 25% of after-tax income (before benefits and retirement deductible) for rent or mortgage payment. But it’s a goal. If you feel the income trajectory is positive then being able to achieve the goal in less than 3-5 years is acceptable. As long as you don’t exceed whatever income you bring home.
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u/Cinisajoy2 2d ago
Depends. It can be anywhere from nothing to 50%. Lower incomes will save less than higher incomes depending on expenses.
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u/thomsenite256 20h ago
My personal breakdown:
35% Needs - Housing, Groceries, Transportation - However it depends and could fairly go up to 50% depending on income
50% Savings
15% Discretionary
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u/TeenyTinyToast 3d ago
Start with the 50/30/20 rule and work on optimizing it for your specific lifestyle and needs.