Renter's rule is a rule to calculate the optimum rent of an individual against the income of such individual. This rule says that ant person should not spend more than the earnings of one week on rent of one month. This rule helps the renters to save ample amount of funds for other necessities like food, clothing, and transportation.
Rule of thumb for renter's rule
- First rule says that by dividing annual gross income by [tex]40[/tex] optimum spending for rent can be obtained.
- Another rule says that [tex]30[/tex]% of the annual gross income can be used for spending on rent.
Hence the annual income will be [tex]\$19916[/tex] and the rent for each month should not be more than [tex]\$497.4[/tex]
Calculation of gross annual income
[tex]\rm\:Annual\: Income= \dfrac{Income\:of\:two\:weeks}{2}\: x\ Total\:weeks\\\\\\\rm\: Annual \:Income= \dfrac{766}{2} \:x\ 52\\\\\\\rm\:Annual \:Income = 383\:x\ 52\\\\\\\rm\: Annual \:Income=\$19916[/tex]
Calculation of monthly rent
[tex]\rm\:Optimum\:Rent\:=\dfrac{\:Gross\:Annual\:Income}{40} \\\\\\\rm\:Optimum\:Rent\:=\dfrac{19916}{40} \\\\\\\rm\:Optimum\:Rent\:=\$ 497.4[/tex]
Therefore the optimum rent as per the Renter's Rule is [tex]\$497.4[/tex]
Learn more about Renter's Rule here:
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