Responsible Tenants Manage Their Finances through Personal Budgeting
Frequently Asked Questions about personal budgets:
Q: What is a personal budget?
A: A personal budget is an itemized list of monthly income and expenses. Your income is added to your budget, and your expenses are subtracted from that amount. Making a personal budget is easy enough, either written by hand on paper on using an electronic spreadsheet. A calculator is a useful tool to have on hand to help with the math.
Q: Why have a budget?
A: To be a Responsible Tenant, you need to be responsible with your finances. Being a renter means you’ll have to juggle several expenses. When you create a budget, you list your income and your monthly bills and other expenses, which helps you manage your finances. Your monthly budget will show you ahead of time if you’re about to have a shortfall, so you can cut back on spending or other expenses in time to avoid a financial conflict.
Q: How much of my income should go for rent?
A: The general recommendation for a personal budget is to spend less than 30% of your income on housing. An easy equation is to take the amount of rent and utilities (say, $700), and divide it by your monthly income (say, $2,500). The answer to the equation is the percentage of income that rent would take.
Equation: rent ÷ income = % that rent is of that income
Example: 700 ÷ 2,500 = 0.28 = 28% (a safe amount to spend on rent)
Watch this video on how to start a personal budget:
See the online YouTube video – https://youtu.be/8bfiXoEeYq4. This video helps prioritize and manage overall spending. It also helps planning and monitoring a family budget to help potential tenants identify and determine unnecessary spending, to adapt quickly to financial emergencies, and to achieve the financial goal of renting the right house for you.
A tight budget might be alleviated by sharing a home with others:
Factors to consider before sharing a home:
- Benefit – sharing the rent makes household expenses more affordable
- Disadvantages: – less privacy and control
- Finding someone to share my home with – should I advertise? Where should I advertise?
- Which costs would be shared: rent, utilities, food?
- What responsibilities are assigned to each housemate?
- How to screen my future housemate/s?
- What happens if it doesn’t work – who carries the costs and deposit until I find a replacement?
Some useful budgeting tools:
- You can download the Excel version or the PDF version of the budget from Renterspass.org.
- Download the Excel version by clicking on this link Personal budget
- Download the PDF version by clicking on this Personal budget