Hi everyone!
I’m taking a job in San Francisco this fall and I’m beginning my budgeting. I have zero idea how much I should spend on rent, and with SF being an expensive area that only gets more ambiguous.
I will be making $85-90k. No student loans. No debt. No car payment. Only crucial expenses will be rent, utilities, food, essentials, and gas. I’m wanting to create solid commitment to savings and investments.
Is there a rule of thumb I should go by? Thank you!
New graduate – How much should I spend on rent in an expensive city? (SF)
byu/Moist_Airport1213 inpersonalfinance
Posted by Moist_Airport1213
6 Comments
I wouldn’t spend more than $1200 in your shoes. If that means roommates, and it will, then get some.
Roommates? You can find something in the 1k to 2k range, and numerous good options. Solo, the typical studio is 2.5k and up, 1bed can be that to 3k plus. You’ll almost certainly be housing overburdened by the technical definition no matter what. But it isn’t impossible at all, you can make it. The desirable places get snapped up and move fast, so it helps a ton to be out here while you look for a place. A friend who recently moved to SF had a short term Airbnb rental while doing the apartment search. It shouldn’t take more than 1 month to be able to move into a place starting from scratch, but you may need to go to a handful of showings and act fast if it checks your boxes.
As little as you can.
You’re better off approaching the problem from the opposite perspective- explore the rental market and do your research and figure out what is the least you can spend to meet your minimum needs (location, size, amenities, etc.)
If you instead start with the amount that appears to fit in your budget then you are likely to spend up to that max and not be able to save and invest as much.
Another way to think about it is that your approach is basically how care salesmen want you to think.
You have to have a place to live. With that salary in that city, you need to just find the cheapest thing you can that meets your needs. You’ll likely need to have roommates to make it workable. You may not be able to save much until you can get your salary increased.
The rule of thumb is spend no more than 30% of your gross income on housing.
First of, congrats on the job and graduating!
My first advice is live as cheaply as you can as if you were still in college so, roommates, cook your own meals, don’t go out too often, walk when you can! Anything else you can think of. Your salary isn’t great in an expensive city but everyone has to start somewhere. Don’t come in with a mindset that I deserve this or that.
You should be looking for rooms for rent close to work so you don’t need a car and go from there.