By Focal Times
clock 06-03-2021
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A Guide to Your Rental Budget 

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Congratulations, you’re finally taking the next step in your adult life! Moving out of your family home and into your newly rented crib can be a daunting experience but it’s a good start towards independence and a good warm up to get you ready for a mortgage in the future. Renting a property is just a big responsibility as any, especially if you’re renting alone with no one to split the expenses with. 


Let us show you how to curate a sensible rental budget and still have some money to spare for fun.



Knowing Your Total Income



Before setting out a budget, it is important to know how much disposable income you have e.g. the sum of money you have in hand after setting aside some funds for bills and emergency savings. Knowing how much money you have will give you a clearer picture of what you can afford to rent. It will also help track your spending in order to minimize unnecessary financial leaks. 



Stick to the 25-35 Rule 



Ideally, how much you spend on rental should not exceed 25 to 35 per cent of your disposable income. This means that, if your nett income (after tax, bills and savings) is RM3,000, your rental expenditure should not exceed a maximum of RM1,050. Bear in mind that this sum is inclusive of other expenditures, such as utilities (water, electricity, maintenance, etc.) and other household spendings.



Make Compromises



Weighing in pros and cons, as well as making compromises, is necessary when it comes to renting – or buying for that matter. In this instance, if you’re looking to stay in a popular, more urban neighbourhood be prepared to fork out more money on rental. Alternatively, if you don’t mind a longer commute and limited access to public amenities, there are better rental options in the suburban areas that may be more suited to your budget. Choose wisely. 



Decide on Furnishing



Rental prices are very much affected by the furnishing and facilities available in the respective properties. If you decide that you could do fine with minimal furnishing and facilities like a water heater and air conditioning, then you could very well spend more on a bigger property and/or look for a place in a more popular neighbourhood. Otherwise, you could opt for lower rent and choose to invest in furniture instead, which you can take with you when you have your own house.



Save Up Few Months in Advance 



Most landlords require a ‘1+1+utilities’ payment upon signing a contract with a new tenant. This usually means that you’re required to pay a month’s rental as a deposit, which is usually refunded when you decide to move out. It’s advisable for you to start saving up two to three months of rental payment before moving it. Also, keep in mind that you will normally have to invest in one-time household items, such as a mop, broom, toilet brush, new curtains, floor mat to name a few.



Understanding the Fine Prints 



Some rental agreements are straightforward: a fixed sum to be paid each month to cover rent, utilities and management fees. However, there are some landlords who still expect you to foot the bill for property assessment tax, quit rent and other expenses on top of your monthly rent. Be sure that all terms and conditions have been fully agreed upon before you sign the tenancy agreement/contract.



With that said, now you’re all set. Welcome to your new home!







The views and opinions expressed in this article are those of the authors and not intended to malign any company, individual or necessarily reflect the official policy or position of any agency or organization. 



Focal Times is a subsidiary of Maxworld Consulting Sdn Bhd, a regional organization founded by a mixture of agile and experienced corporate finance, venture capital and industrial experts. This establishment focuses on sharing current banking affairs, latest property developments and updates and more. 






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