How much to spend on rent

  • As little as possible; if you are saving for a house deposit or trying to get out of debt

  • A healthy and a target amount could be 25% of your net take-home income

  • It's amazing if you are around 20% of your net take-home income

  • The upper limit should be no more than 30% of your net take-home income

  • You will possibly end up in consumer debt or not having money for other important areas of your life if your rent is around 40% of your net take-home income

Breaking point

It's not getting any cheaper with anything really. Particularly rent, if you are renting in a capital city. Sydney's average rent is at a breaking point of about 37.9% of household income. Melbourne is around 30%. It's scary that these are averages. Does that mean some people in Sydney are spending more than 40% of their income on rent?

Renting with friends

This rule would apply to your portion of rent that you're responsible for. So you'll always be able to get to the target amount of 25% or 20% easier than renting alone.

Renting with a spouse or partner

You would use the two joint net incomes as your guide.

Renting should be camping if...

If you are saving for a home to buy and live in yourself, maybe you need to compromise for the short term. A house a little older, a bathroom a little "lavender" from the 80's or perhaps a home further away from where you would desire. It's only temporary! For me my rent was well under 25% of my income

When I first moved out of home with a mate, we both paid $180 each per week for what we called "The Fellowship Temple of Cosmic Joy". Many of house parties were had. It was actually a soul crushing terracotta nightmare - it was not as bright as the pics below!

It was definitely camping and temporary for me as I was starting my business at the time and saving for my own place - which is not as terracotta!

How to calculate your rent

That's really easy. Get the amount that goes into your bank account each pay. Put it into a calculator as follows:

Weekly pay x 0.25 = target weekly rent


$980 x 0.25 = $245 per week

You can do this in reverse if you like. Say you were earning $980 per week and paying $320 per week rent, you would do it this way

$320 / $980 = 0.33

So someone earning $980 per week, paying $320 per week in rent would be spending 33% of their income on rent. I would not suggest this person increases their rent. 

Also, see finder for more information and where I got some info from for this post.


p.s. you can apply this same logic and % to your mortgage repayments :)