Renter's Guide

5 steps to budget realistically as a renter

Whether you’re renting for the first time or the tenth, your financial plan needs to take every possible expense into account
  • Save

The cost of renting is no joke. In larger provinces like BC and Ontario, rental units can gobble up as much as 20% of a Canadians annual income. Before you start flipping coins to see who gets the biggest bedroom or pondering paint colours, it pays to take a closer look at the true financial costs of renting.

To make the transition less overwhelming, this simple five-step process can take your rental experience from sleep-deprived to stress-free. So, where do you start?

1. Confirm your income and expenses

  • Save

As tedious as this task may be, it’s imperative to start out with a thorough understanding of your current financial situation in your steps to budget as a renter. Take the time to write down each source of income and the amount you earn from it each month. From there, calculate a rough estimate of your monthly expenses (beyond the amount you expect to pay for rent). Reviewing your bank statements over a three to six month period and averaging out your expenses is a good way to go about this.

Be sure to include such discretionary expenses as short- and long-term savings goals. That way, you’ll know exactly how much will be left over each month for rent. Decide whether or not you feel comfortable with zero-based budgeting — where every dollar you earn is accounted for and spent accordingly — or if you’d prefer to leave some money as a buffer each month. A good rule of thumb is not to spend more than one-third of your monthly income on rent.

Renter's Guide - Additional Reading

2. Set a budget that suits your lifestyle

  • Save

Budgets can help to keep your financial life under control. A rental budget should include fixed expenses such as rent (duh), utilities (natural gas, water, electricity), internet and cable, food, transportation, child or pet care and any additional subscription services. Once you’ve allocated funds to these categories, take a look at your discretionary expenses. These are line items that you do not really need to get by — things like entertainment and take-out coffee.

Once you have a handle on all the expenses related to your general spending habits (including the less obvious ones), it’s time to choose a budgeting tool. If you’d prefer not to use an Excel spreadsheet or record your income and expenses by hand, consider a budgeting app like Mint, YNAB (You Need a Budget), or Charlie.

3. Consider rent-only expenses

  • Save

Just like homeownership budgets, rental budgets should account for any expenses related directly to property rental costs, such as damage deposits, pet deposits, tenant’s insurance, storage fees, move-in-day administration fees and garbage pickup. Many landlords will build these costs into your monthly rent, but more often than not, these one-time fees come as an unwelcome surprise that can make the transition to a new rental unit surprisingly expensive.

If you’re required to put down a deposit on your new place, be sure to use any rent deposit money that’s been returned to you from prior rentals before being tempted to spend it on that shiny new couch. If you’ve never rented before, it’s a good idea to save up at least two months’ worth of rent before signing a lease. Saving this way in advance can help to ensure a smooth and predictable start to your life as a tenant.

4. Protect yourself from the unexpected

  • Save

Just like any housing situation, you need to protect yourself and your belongings. Although you may not physically own the rental unit, it will still be the new home for all of your assets, some of which may have considerable monetary or sentimental value. Therefore, tenants’ insurance is an absolute must. Not only is this type of insurance very affordable, but it can protect you from unexpected events like a fire or break-in — especially essential in any situation where you are not solely responsible for safety and security.

To further protect your interests before signing a lease agreement, you need to be aware of exactly what landlords have the right to ask of you. For example, most agreements will stipulate a security deposit of some sort, so take the time to learn how much these fees can be as regulated by your province or territory.

5. Have a long-term plan

  • Save

Before you move, consider your future financial goals. Are you hoping to take a vacation? If so, will you able to save enough money for it alongside your monthly expenses? Do you plan to rent only for a couple of years before buying your own home? If so, will you be able to put aside a large enough down payment while keeping up with rental costs? Such questions can help you set a realistic budget and determine how much you can comfortably allocate to rent payments each month.

Having a clear picture of your future financial goals before you meet a potential landlord can also be a great advantage. Perhaps you’ll be able to sign a longer or shorter lease or to afford a slightly better unit. By being honest with yourself, you’re more likely to end up with a landlord that is willing to work with you to keep your financial goals on track.

Whatever your situation, renting requires both a solid financial plan and an in-depth understanding of your day-to-day spending habits. By following this five-step plan, you can embark on your search for a rental property with complete confidence, and impressively well-sorted finances.

Renter's Guide - Additional Reading

Alyssa Davies
Alyssa Davies

Alyssa is an award-winning personal finance blogger and founder of She writes about being a mom, overcoming personal debts, and how to get away with affording your ridiculously expensive latte habit. A new homeowner, Alyssa brings her real-life knowledge of the Canadian real estate market and smart money matters to this growing brand.