If you’re hunting for a new apartment, brace yourself: Your rent is probably going to eat up a lot of your paycheck, especially in urban areas.

According to a report by Attom Data Solutions, rent takes up an average of 38.6 percent of people's paychecks nationwide. But that can also be much higher in urban areas. A typical renter in Miami, for instance, now spends nearly 50 percent of her income to lease a one-bedroom apartment, a Trulia study found — and that figure is even higher for the millennial renter, who spends 54 percent on her Miami pad. San Francisco, New York and Los Angeles, meanwhile, all have percentages in the mid-to-upper 30s.

So much for that old rule of thumb that says you should spend only 30 percent of your pay on housing.

But if the choice is between spending a little extra or not having a place to live, you may have to treat the 30 percent rent-to-income ratio as more of a guideline, says financial planner Matt Shapiro, CFP® — although he recommends capping it at 40 percent so you still have money left over for other essential costs as well as your financial goals, like paying down debt or saving for retirement.

If you're closer to that 40 percent mark than you'd like to be, here are six ways to help deal with the reality of expensive rent, whether you're staying put or looking for a new lease to sign.


Budgeting is like dieting — it’s not always fun, but if you have a plan and stay consistent, it can pay off in the end. That means knowing what you spend on both the necessary stuff, like utilities and rent, and on the fun stuff, like dining out and nights at the movies. And yet, “there are a lot of people who don’t even think about their discretionary spending, let alone track it,” says Shapiro.

If you don’t already monitor your spending, the first step is to assess where your money is going on a monthly basis. You can do this by looking at your last three months’ worth of bank and credit card statements to see how much you’re spending on both fixed expenses (those costs that don't change much from month to month) as well as your flexible spending (things like gas, food and entertainment that aren't always consistent).

Then see which areas of your budget you can cut back on. If it can't be rent, you might have to make a few adjustments to your day-to-day in order to free up some cash. Maybe it's bringing your lunch to work more often, or taking more public transportation and fewer Ubers. Think of it as a trade off so you can continue to afford your rent as well as put money toward short- and long-term savings goals.


A real estate agent can help you find apartments that match your location, price and size requirements; submit rental applications on your behalf; and negotiate rent with a prospective landlord. Plus, an agent may also have access to rental properties that aren’t on the market yet, giving you further opportunities to find the place that’s right for you, both location and price-wise.


The ability to negotiate will ultimately depend on how hot the market is — if multiple people are vying for the same studio, the landlord isn’t going to lower the price. But for areas with less demand, you do have some bargaining chips.

First, see how long the unit has been vacant. “If it’s been on the market for over 30 days, you may have more leeway to negotiate because the owner will be eager to find a renter,” says Joe DeFilippo, a real estate agent and rental specialist with City Chic Real Estate in Washington, D.C.

And just like a job interview, show up with references, such as a letter from a previous landlord that says you paid rent on time, kept the property in good condition and got along well with neighbors.

Offering to sign a 24-month lease instead of the standard 12-month contract can also work in your favor, since it saves the landlord the hassle of finding a new tenant in a year. You may also be able to knock the bill down on an overpriced unit by showing the landlord the lower price tags on comparable apartments.


If the landlord isn’t willing to budge on the rent price, there are other costs you can negotiate. Ask him to cover or split the move-in fee, which typically ranges from $250 to $500, says DeFilippo. He may also be persuaded to waive the application fee, which usually costs $35 to $50 per tenant over 18 years old.

If you plan to renew your lease, ask the landlord to include a provision in the agreement that states rent won’t increase when you re-sign the contract. This could mean serious savings, since annual rent hikes can be substantial. Through August 2017, for example, Seattle and Portland, Oregon, rents are expected to increase by 7.2 percent and 6 percent, respectively, according to a Zillow report.


In America’s biggest rental markets, you can save an average of 13 percent of your income by taking on a roommate, the same Trulia study found. Makes sense, considering living with a roommate gives you someone to split monthly living expenses with, which could cut a lot of your fixed costs in half.

If finding a roommate on Craigslist isn’t for you, try roommate matchmaking sites such as Roommates.com, Roomster.com or SpareRoom.com. You can even check out candidates in person with the roommate version of speed-dating, offered through sites like SpeedRoommating.com.

Keep in mind, though, that if you do sign a lease with a roommate, write up a roommate contract that clearly spells out your expectations, from who pays what to upkeep to visitor expectations.


With the rise of Airbnb and HomeAway, you can make some serious money by renting out your apartment (or even just a room) to cost-conscious travelers. In fact, Airbnb hosts in New York City earned an average of $5,474 in 2016.

So if you frequently travel for work or have some vacations lined up, think about renting out your unused space for a profit. However, make sure you review your lease agreement beforehand, as some rental agreements prohibit tenants from subletting, as well as the laws of your city so you're not illegally renting out your place.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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