Rent is probably one of the most expensive expenses and saving for it is another challenge facing most people who live in cities like Lagos.
A lot of people have issues with their landlords not because they don’t have the money to pay their house owners but because they don’t really plan to save for the rent on time.
So, if you’ve been having issues with paying rents, these useful tips, inspired by Smart Money Vlogger, Arese Ugwu, will guide you on how to save for rent and avoid landlord’s embarrassment.
1. Your rent should not exceed 30 percent of your total income
Before you rent that house, you have to consider your monthly income and make sure the rent is not way more than 30 percent of your income.
Living in a city like Lagos is expensive and when you are making rental decisions, you have to ensure your income is not stretched so much that you won’t be able to pay subsequent rents.
For instance, if your salary is N1.2m per annum, it means your rent should not be more than N360,000 per year. This makes it easier for you to keep paying the rent and avoid having problems with your landlord.
However, if your rent is a little above the prescribed 30 percent, then you’ve got to make sacrifices in making some financial decisions. You may decide to go for a car as expensive as your dream car to make up for your rental obligations.
2. Save early for your rent
Sometimes paying for your rents becomes a burden when you set unrealistic goals and refuse to save early for the rent.
Since the rent takes only 30 percent of your income, you should be able to set some money aside for the rent so that it won’t become a burden at the end of the year.
Everyone likes the idea of saving money to accomplish their dreams.
The mistake some people make is that since the rent takes only three months of the salary, they can start saving from October and pay the landlord in December.
See, this is a terrible decision because there are other unplanned expenses that may come up between October and December. What if you need to fix your car, send money to your family members and so on and take care of other necessities?
Saving for the rent on a monthly basis is the best because if you let the rent become a burden, you might end up borrowing to pay the rent and that could put you in more problems.
3. Don’t put all your savings in one account.
When financial advisers tell you not to put all your eggs in one basket. This is what they mean.
A lot of people save their money in just one account and this makes them to be unspecific in their saving goals. It is not advisable to save your holiday savings, emergency savings, rent savings and your new car savings in one same account. The problem with this is one might end up not achieving any of these saving goals because you dip your hand into one account to solve all problems.
So, make payment of your rent easy, have different accounts for your rent and pay some money, probably N30,000 every month and make sure you don’t have access to this account so as to realize your saving and financial goals.