Leaving your old place and moving to a new one can be overwhelming yet exciting at the same time. Especially if you are renting property for the first time, it can get quite tricky for you to manage your expenses.
Ideally, you should have enough money left to cover travel expenses and groceries, and even manage some savings after paying your monthly rent. This guide will help you determine how much of your budget should go to rent.
Top Budgeting Tactics to Help You Budget Your Rent
Although there is no concept of one-size-fits-all when it comes to budgeting your expenses. Your rent budget can differ from others depending on your income and expenses.
Here we will discuss two of the most popular budgeting tactics that can help determine how much of your budget should go to rent.
30% Rule
The most popular budgeting technique is the 30% rule. The rule is to spend about 30% of your gross income (without taxes) on monthly rent. For example, if you earn AED 5000 per month in the UAE, then about AED 1500 can be spent on monthly rent.
That said, the 30% rule is not a hard and fast one. A renter must always take into account all the other expenses before setting aside a percentage of your monthly income for rent.
If you are already in debt, you should consider renting a property that takes a smaller chunk than 30% of your income. You can find a room for rent in the UAE on a sharing basis at quite affordable rates.
50/30/20 Rule
Like the 30% rule, the 50/30/20 rule is also one of the popular rent calculator methods. This budgeting technique helps you allocate your monthly income into three major portions, 50% of income is allocated for needs, 30% for wants, and the remaining 20% for savings or debt payments.
For instance, if you earn AED 5000 monthly (net income), it should be divided as follows:
- 50% of your monthly income is AED 2500 for rent, utilities, fuel, service charges, groceries, and insurance.
- 30% of your monthly income is AED 1500 for shopping and leisure activities
- 20% of your monthly income is AED 1000 for savings and debt payments.
Now, if we look at the 50% of your monthly income and the expenses that fall in this category, then managing your budget for rent will seem quite tricky. However, searching for an affordable property for rent in Dubai can lessen the strain on your budget.
Although you may have all your monthly expenses in your head, visualising them digitally or physically can help you keep organised and determine how much of your budget should go to rent. A rent calculator can help you in this regard.
DLD’s Rental Index – Rent Calculator in the UAE
To minimise disputes between tenants and landlords over the increase in rents, Dubai Land Department (DLD) launched an electronic service, namely the Rental Increase Calculator or Rental Index. This service helps calculate the increase in annual rent based on the region’s renal value, property configuration, and several other factors.
This rent calculator is available free of cost on the official website of DLD. This service serves as a guide for customers interested in renting or leasing any property in Dubai. It helps them to develop a better understanding of different property rents in various areas of the Emirate.
Nevertheless, there are many other factors to consider when setting a budget and determining your monthly rent. Let’s have a look at them.
Major Factors Affecting your Budget
Your area of residence plays a major role in setting your monthly budget. It affects everything like your commute routine, lifestyle, rent, and much more.
For example, the property rent far from the centre of the city is less expensive. However, it will cost you an arm and a leg to manage transportation, as all the amenities and your workplace are usually located in the main city. Therefore, you should look for savings and cut costs wherever possible.
Below are some factors that affect your budget majorly.
Utilities
Electricity, heat, water, gas, and internet fall into the ‘needs’ category and surely one cannot live off these. However, cable falls under the ‘wants’ category and should be cut off when you are already tight on your budget.
Transportation
Getting a place for rent nearer to your workplace and affordable rent is a dream come true for every working person. However, to cut down the transportation cost, you can opt for local transport instead of getting an Uber.
Making some exceptions in your budget, you can also save to buy a used car for sale in the UAE at affordable rates.
Groceries
To budget your income, you should try getting a planned meal instead of buying or ordering food from restaurants. Visit different souks and supermarkets in Dubai for grocery shopping rather than supermarkets to cut down the grocery budget.
Leisure Activities
Rather than spending your leisure time at expensive places like fun lands and waterparks, consider going to parks with a free entry like Al Barsha Pond Park and Burj Park in Dubai. These free-of-cost leisure pursuits often have jogging and cycling tracks and offer some sports activities as well.
Rent
Living alone burdens you with rent and other expenditures. Try finding a roommate or rental flats on sharing basis to split the rent between you two.
This concludes our guide on how much you should be spending on your rent. So before you start property hunting to rent in the UAE, determine the monthly rent you can truly afford. You can also go through this listing of properties for rent in the UAE to find an ideal place that best fits your budget. You can also check these apartments for rent in the UAE at affordable rates.
Stay tuned to the UAE’s top property blog for more information on affordable rental properties.
