What’s the max that someone who is making $2600 a month post tax should spend on rent? Context: sibling is starting out in commission role so this number is the minimum they’d be making, they have emergency fund already, car/insurance paid for by work. They don’t know anyone in the area to live with but studios/1B in decent areas start at $1300

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By the book, 2600*.3 =780 for rent.. Practically speaking $1300 should be fine, may be a tough couple months before a commission check hits. He should find a roommate to limit that stress in my opinion.

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you can still save quite a bit of the other half. i spend 50% of take home on rent, a little bit on food, the rest i save

Also worth noting they’re pretty economical on food expenses / other expenses. I’ve heard of the 25% or 30% rule but curious as to how people in this income range should approach. I fortunately never had this tight of a budget so don’t have a ton of insight to help here

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But what is their target commission and how achievable is it? They should risk weight some of that income especially if it’s a large portion of total comp

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Given that you work at McKinsey, can you help him with offsetting $500/month? Not that you are required, but with assistance it is possible

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Are there any covid-related job security concerns? Do they want a roommate? I’m assuming it’s not NYC or SF?

Don’t seem to be covid concerns with job security, T2/3 city, doesn’t want a roommate despite my encouragement to find one (which is fair I guess since in today’s times you’re quarantining with the person)

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If they’re frugal in other parts of their life, don’t have debt, and already have an emergency fund, etc. I don’t think 50% ($1300) is too much to spend on a place on their own in these COVID times. Essentially, they’re choosing to spend part of their discretionary portion of income on rent. So choosing not to spend on entertainment/dining in order to have a better place to live. Most people in this income range do end up spending more like 40%-50% of their income on rent just because of how much rent has gone up in many places. And it sounds like this is temporary until their commissions pick up. So should become a lower percentage soon.

Living in nyc I spent that % of take home on rent when I first decided to live alone. Ended up hopping jobs soon thereafter which gave some financial relief, but if your sibling has savings in place already and that is their bare minimum take home, I think it’s alright for the short term. Wouldn’t recommend it as a long term play though.

When I was making that much, I was splurging about $900/mo for a studio in a HCOL city (showing my age) and things were extremely tight. The 25/30% rule applies. Either they’re going to need a roommate, or they have to live on a college-like budget. If they have student loans there’s a really strong chance they’ll get caught up in credit card debt.

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