In November I wrote a blog post musing about how much I should be spending on my apartment when I moved to Halifax. It was a tough call, because my husband didn’t have a job yet, so I was working on an estimate of what I thought his income would end up being. We looked at a bunch of places in a variety of price points, and settled on one that was in the medium range.
We’ve now been living here for two and a half months, and overall I’m pretty happy with the place. The management could be better, they aren’t very responsive and we’re the first residential tenants in the building so there have been some growing pains, but overall I’m happy with the apartment itself. It’s pretty nice but not too nice, it’s a two bedroom, not huge, but nor is it cramped. It’s just right.
Budget-wise, this is more than I’ve ever spent on housing. Even when I used to live in the city, I lived in a one-bedroom apartment. This is a two-bed, and is correspondingly more expensive. Fortunately, my husband has a job now, and with his full-time income and mine combined, this place costs exactly 35% of our net income.
If you’ll recall the budget pie chart I love to flaunt so much, you’ll know that 35% of my net income is precisely how much I should be spending on housing to have a ‘balanced budget’. This means my estimations and conservative thinking paid off, and we ended up with a balanced budget. Here’s what a typical budget should look like:
Only Spending 35% Of Your Income on Housing Enables Saving
The whole point of only spending 35% of our joint net income on housing isn’t just to follow the rules of this little pie chart. It’s because we want to have cash left over to save for our goals, like travel and a down payment on a home. With our two full time incomes, we should be able to save a pretty big chunk of our net income. Here’s what our actual budget looks like:
Looking pretty good in my opinion! Since my debt pie slice is at 0% (versus 15% in the model budget) and my transportation costs are 6% (versus 15% in the model budget) I have an extra 24% in my budget to play around with. I redistributed that between savings and other living expenses. The other living expenses section is a little high right now because I’ve allotted some money for spending on furniture, eventually that’ll decrease and I’ll be able to put even more money towards savings.
At this rate, we’ll be putting away enough money to meet my 2015 goals of boosting our retirement savings to $14,000 and saving $5,000 for a house, plus a little extra for travel and a secret savings goal that I’m not ready to share.
This is really great news. Moving to a new city can be stressful, especially when one or both earners are job hunting. There are so many variables at play, I wasn’t sure how much we were going to end up saving in this new, more expensive city. Turns out, we can still save quite a bit, which I’m really happy about. I had some minor fears that we’d be living a little more paycheque to paycheque, and I’m very glad that our reality is much more savings oriented.
So, my estimations worked, after agonizing over how much to spend on an apartment, it turns out we chose just right. I love when life works out.
Have you recently made any big changes to your budget? Does your budget look similar to the model one shown above? How much of your net income do you spend on housing? I want to know!