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How Much Rent Can I Afford on $60K in 2024?

By Jacqueline DeMarco · February 15, 2023 · 5 minute read

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How Much Rent Can I Afford on $60K in 2024?

Determining how much to spend on rent is tricky. The standard advice is that you should set aside about 30% of your gross income for rent. So if you make $60K, your rent should not exceed $1,500. While this might be plenty for an individual living in a low-cost area, it doesn’t work for a family in a pricy neighborhood.

Keep reading to learn about the nuances and compromises of budgeting for rent on a $60K salary.

How Much Rent Can I Afford on $60K

While nice and simple, the 30% rule doesn’t allow much flexibility. Another method to determine how much rent you can afford on $60K is the 50/30/20 budgeting rule. This recommends allocating 50% of your monthly take-home pay to necessities, 30% to discretionary expenses, and 20% to debt payments and savings.

First, we’ll calculate approximate take-home pay for someone making $60K. Payroll withholding amounts vary by location, benefit deductions, and other factors. For our purposes, we’ll assume our worker lives in Illinois, claims 1 allowance on their W-4, and has no other deductions for health insurance or retirement plans. This gives them a monthly take-home salary of $3,644.

Half that is $1,822. That bucket must hold enough to cover not only rent but also other living expenses such as utilities, groceries, and transportation. Cutting back in one area can allow you to devote more money to rent, but this is still a tight budget.

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How Much Should You Spend on Rent

The goal of these budgeting guidelines is to help renters leave some room in their budget for paying off debt and saving money. If an individual has no debt and has already saved a fair amount in an emergency fund, then they can allocate a greater percentage of their income to rent.

On the other hand, there are many benefits associated with living below one’s means, including being able to comfortably afford surprise expenses.

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Monthly Cost of Living Expenses to Consider

When determining how much to spend on rent, budgeters need to know what they’re spending on all their other living expenses. That way, they can see how much room is left in the budget for rent.

It can be helpful to look back at the past few months of living expenses to get a general idea of what you typically spend. A free budget app can help you do that quickly and easily.

Here are the major expenses to keep in mind:

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Groceries

We all need to eat, and the last thing anyone wants to do is take on such a large rent payment that they can’t afford quality food. The U.S. Department of Agriculture (USDA) estimates that the average woman budget between $209 and $352 on groceries. Spending on the higher end of the grocery budget range leaves someone making $60K with $1,470 to cover rent, utilities, and other necessities.

Utilities

Electricity, heat, cell service, and WiFi are absolute necessities. Residents of Illinois, like our $60K worker, pay on average $331 in utilities per month.

Taxes

Above, we calculated a $60K worker’s after-tax income to determine how much they can afford to spend on rent. But self-employed people and gig workers may also have to deal with sending estimated tax payments to the IRS on a quarterly basis.

If someone isn’t putting enough money aside for taxes, they can be hit with a big tax bill — plus penalties — come April. If you’re paying estimated quarterly taxes for the first time this year, consider talking to a tax professional to make sure you’re covering all your bases.

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Furnishings and Moving Expenses

Moving to a new rental can trigger significant one-time costs. From packing supplies to truck rental, moving costs can be expensive.

So can setting up your new place, which may require furnishings, housewares, and incidentals — even if you’re downsizing your home. By setting aside a little every month, you can slowly accumulate enough to cover your next move.

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The Takeaway

Affording rent can be challenging whether someone is living off a single income or is part of a dual income household. There are a few different approaches to determining how much rent someone making $60K can afford. One rule of thumbs advises that you spend no more than 30% of your gross income rent. Another says to keep all living expenses including rent to under 50% of your take-home pay.

These guidelines exist to encourage people not to use up too much of their budget on rent. A high rent payment can create financial strain and make it difficult to manage the many expenses that life throws your way.

Managing our financial lives can be challenging, but SoFi makes it easier to set savings goals, monitor spending, and make progress. Our money tracker app makes it possible to connect multiple accounts to easily monitor your balances all in one place.

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FAQ

Is 50% on rent too much?

Typically, spending 50% of your income on rent isn’t advisable. Many budgeting methods recommend spending 50% on all necessary living expenses each month, including rent, utilities, food, and transportation. However, if you live in an expensive area, have no debt, and already have a sizable savings account, you may be able to get away with forking over close to 50% on rent until your circumstances improve.

What percentage of income should go to rent?

Ideally, it’s best to spend 30% of gross income or less on rent. That means if someone makes $60,000 a year, they can afford up to $1,500 per month on rent.

How do you calculate 3x rent?

There is a school of thought that it’s necessary to make three times as much as your annual rent costs. For example, if someone’s rent is $1,000, they need to bring home $3,000 a month in income. To calculate 3x rent, all someone has to do is multiply their rent by three and from there can see if that amount is more or less than their monthly income.


Photo credit: iStock/KentWeakley

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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