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If You Make $40,000 Per Year, You Must Pay $799 Monthly Rent. Here’s Why.
Better to use math to avoid unpleasant surprises.
Your relationship with money is emotional and not exact, but when it comes to paying rent you should use mathematics to avoid unpleasant surprises.
How much rent I can pay with an annual salary of $40,000 ultimately depends on how much I spend elsewhere.
Most practical rules result from experience and are always so simple that they can be quickly determined by logical, rather than emotional, arithmetic. The result is that you make clear decisions. And most of the time it is quite precise.
Let’s try to determine the optimal amount with two practical money rules.
The Rent Rule: 40
According to this rule, the annual salary should be 40 times the rent.
If I earn $40,000 per year, I qualify for a monthly rent of $1,000.
The bill: $40,000 / 40 = $1,000
Examples with different annual salaries:
- $60,000 annual salary / 40 = $1,500 monthly rent
- $40,000 annual salary / $40 = $1,000 monthly rent
- $35,000 annual salary / $40 = $875 monthly rent
