7 steps to creating a realistic budget as a renter + Rental budget calculator

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Susan Meyer

Senior Editorial Manager

  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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Ross Martin

Insurance Writer

  • 4+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

Ross h…

When you’re living on your own for the first time, setting a budget can feel daunting. Honestly, even if you’ve been living on your own for a while, it can be hard to keep track of where all your money is going.

Creating a budget as a renter is essential for managing your finances and ensuring that you can cover your monthly expenses while also saving for your future.

Here's a step-by-step guide on how to make a budget as a renter. We also have a calculator to help keep track of expenses. 

1. Calculate your monthly income.

The first step of making a budget is figuring out how much you have coming in. Include all sources of income, such as your salary, wages, freelance work, side gigs and any other regular sources of money. Use your net income (meaning what’s left after taxes and deductions) for a more accurate picture of your available funds.

2. List your monthly expenses.

Now that you know how much you have to work with, figure out where it’s going. Create a comprehensive list of all your monthly expenses. 

Here are a few to consider:

  • Rent
  • Utilities (electricity, water, gas, heat, etc.)
  • Phone, internet and cable
  • Transportation (car payments, gas, public transportation, parking)
  • Groceries
  • Insurance (health, auto, renters)
  • Debt payments (credit cards, loans, etc.)
  • Personal care (toiletries, haircuts, laundry, etc.)
  • Entertainment (dining out, streaming services, concert tickets, etc.)
  • Miscellaneous (gifts, clothing, travel, etc.)

Savings tip

Look through your last few months of expenditures to find everything. You might be surprised to discover subscription services or other expenses you have forgotten about. If you don't use them, cancel them.

3. Categorize your expenses.

Now that you have a pretty good idea of where your money is going, it’s time to group things. Fixed expenses are those that remain consistent each month, such as rent and insurance. Variable expenses can fluctuate, such as groceries, utilities or entertainment.

4. Calculate your total expenses versus income.

Once you’ve categorized all your expenses, you can assign a specific dollar amount to each expense category. For fixed expenses, this should be pretty straightforward. For variable ones, base it on your past spending habits and financial goals. Be realistic about how much you need for each category. It’s never a bad idea to have some contingency.

Now all you have to do is add up all your monthly expenses to determine your total monthly spending.

Subtract your total monthly expenses from your total monthly income. If you have a positive number, congrats! You have a surplus, and you can allocate this to savings or debt repayment.

If you have a negative number, you need to review your budget and find areas to cut back on spending.

Renter's budget calculator

5. Adjust your budget.

If your expenses exceed your income, you'll need to make adjustments. Look for areas where you can reduce spending, such as cutting out non-essential expenses or finding more cost-effective alternatives.

If you’re living outside your means and you want to reduce your expenses, the variable expenses are easier to adjust (as in: go out less or focus on reducing your grocery budget by shopping sales and making simpler meals). 

Fixed expenses are harder to change but can have a bigger impact. For example, moving to a less expensive place when your lease is up or trading your car in for one with a less expensive payment.

Opportunities to save on insurance

Some necessary fixed expenses are also worth exploring options for discounts. For example, show around every six months with your car and renters insurance and consider bundling them for added savings.

6. Set financial goals.

Generally, your short-term financial goal should be to balance your budget and have some money left over at the end of the month. Once you have that surplus, it’s time to figure out how best to use it. These will be your long-term financial goals.

Your long-term goals may include saving for a down payment on a house, paying off debt or building an emergency fund. Allocate a portion of your budget towards achieving these goals.

7. Review your budget regularly.

Budgeting isn’t a one-and-done exercise. Keep track of your spending throughout the month to ensure that you're staying within your budget. Many budgeting apps and tools can help.

Your financial situation can change over time, so it's crucial to review and adjust your budget regularly to reflect those changes. Make necessary modifications to meet your evolving financial goals.

Remember that creating a budget is a flexible process, and it may take some time to find the right balance. The key is to stay disciplined and stick to your budget to achieve your financial objectives.