If you live in a city like Nairobi, rent is likely your biggest budget buster. So, you must always consider managing this cost item in your budget list.

For most people, the biggest question is, how much of your income should go into paying for your rent?

Do not spend more than 25 percent of your gross income on your rent, says Elizabeth Costabir, Chief Executive Officer of Buy Rent Kenya, a real estate online classified.

“When it comes to renting, the rule of thumb is 30 percent of your gross income, but for me, I set it at 25 percent. I divide my income by four. 25 percent goes into rent, 25 percent caters for investment, 25 percent goes into savings, and the remaining 25percent is spent on other basic needs,” Ms. Costabir says.

“When it comes to where I live, the decision is more than money. I don’t mind paying a little more as long as the place is secure and near my workplace,” says George Kalondu, a middle-aged IT expert based in Nairobi.

He continues, “I’ve heard of the 30 percent rule when it comes to rent, which I religiously complied with during my earlier years. But once I started a family I prioritize other things like proximity to my children’s school and other amenities like malls.”

The 30 percent rule, which says you should pay no more than 30 percent of your gross pay on rent stems from a 1969 amendment to public housing requirements in the USA.  If you’re a renter, that 30 percent includes utilities, and if you’re an owner, it includes other home-ownership costs like mortgage interest, service fee, and maintenance costs.

Critics of the 30 percent rule of thumb, however, argue that it is outdated and doesn’t account for modern-day expenses including the cost of TV subscription, streaming services, and internet services that are prevalent and come with housing, especially in the urban set-up.

“As a medical practitioner, the hospital requires us to stay within the vicinity of the workplace. My rent is slightly more than 30 percent of my gross income because the hospital is in an affluent neighborhood. But I get to save on fuel and time spent on traffic, so in a way, these bills get to balance,” says Loise Muthoni, a General Practitioner in one of the hospitals in Nairobi.

When considering how much of your income should go to rent, you should also include an estimation of the cost of utilities for the space you are renting. These should be part of the 30 percent.

On his part, Oscar Kimani, a banker in Nairobi who lives in his own house in Athi River – a neighborhood in the outskirts of Nairobi— told Moolah that he pays approximately a third of his income on mortgage payment, but the gratification of owning a house overrides the grueling three hours he has to spend on traffic every day.

“Homeownership comes with piece of mind. Since I moved into my home in 2017, I am only paying for my mortgage, and although I have to wake up early to make it to work, I find homeownership more financially liberating than having to deal with landlords and agents every month,” Oscar says. “I’m not able to keep the cost of mortgage low, but it is easier to plan other facets of life.”

The best way to estimate how much you can afford to spend on rent is to first look at how much you can save. You must consider your long-term savings goals and market rates.

Beyond financial implications, other factors come into play when deciding on where to live.

“You want to live in a place that is easy and accessible in terms of location.  Then you look at the kind of a property you want to live in – be it an apartment, townhouse, or bungalow.  You’re then going to look around and see the kind of facilities around you such as malls for shopping for your daily needs. How convenient is it to access them?” Costabir notes.

“Look security. Is the neighborhood prone to theft or bad experiences, does it have good lighting?” she says.

Generally, you want to live in a safe environment with water and proximity to public infrastructure.

Another overlooked detail is the quality of the house. Nairobi and select urban centres in Kenya have a history of substandard houses or buildings being destroyed because they sit in government or contested lands.

While the 30 percent rule is widely accepted, it is imperative that you spend the lowest amount acceptable on your rent to be able to grow your savings or pay off your debts including the Higher Education Loans (HELB), particularly when renting your first house.

Globally some of the acceptable tips on saving on rent include getting a roommate to share the cost of the rent with. Negotiate with your landlord or sign a long term lease for a reduced rate.