FINDING a place to live has gotten more complicated – and a lot more expensive – in the pandemic. Rents are soaring across the country with stories of bidding wars rattling nerves and exorbitant fees tacked-on in cities from Fort Lauderdale to Fort Worth.

       You’re probably not going to be able to afford your dream apartment anymore. But how much can you afford?

       It’s more critical than ever to figure out your spending limit on housing before you go out and fall in love with a place that will strain your budget – or worse, send you into debt.

       Paying rent is often a person’s single-largest expense, and one that’s generally fixed for at least 12 months. In this market, you also have to factor in rent hikes when you renew. Which is why people search for some kind of guideline to keep them from getting in over their heads.

       No matter what the Internet tells you, there’s no simple formula that’s going to help.

       The long-standing rule-of-thumb in the personal finance world that renters can spend about one-third of their before-tax income on housing (including utilities) has some serious shortcomings.

       First, the 30% rule is really old. It stems from an earlier standard that one should spend “a week’s wages on a month’s rent,” or 25% of income on housing, which dates back to the late 1800s.

       It became more entrenched in the 1930s, when the 25% figure was used by the government to gauge eligibility for public housing, and then again in 1969, when it was set as a cap for the percentage of income a public housing tenant could pay.

       In 1981, the limit was raised to 30%, where’s it’s stayed for the past 40 years – not just for public housing tenants, but for anyone who Googles “How much should I spend on rent?”

       Much has changed in the intervening decades. The size and makeup of the typical household is different. Many people now face additional non-housing expenses, such as 401(k) contributions or student loans, that renters years ago didn’t have to worry about as much.

       What’s more, rents have been rising faster than wages.

       Let’s say you made US$1,000 (RM4,180) a month and paid US$300 (RM1,254) a month in rent in 1990. In today’s dollars, your wages would now be US$1,150 (RM4,806) while your rent would have jumped to US$741 (RM3,097).

       So what might have satisfied the 30% rule back in 1990 is now far off the mark, more like 64% thanks to different levels of inflation for each, according to calculations by David Bieri, an associate professor of urban affairs at Virginia Tech.

       The 30% rule also doesn’t account for regional differences in the United States housing market.

       The national average for monthly listed rent is US$1,877 (RM7,844), according to Redfin, but there are places where the average rent is far higher, making the 30% rule near-impossible for many.

       Consider New York City, where the average rent is US$3,718 (RM15,538), or Boston, where it’s US$3,637 (RM15,199) – you’d have to be making US$150,000 (RM626,865) a year to hit the 30% limit.

       Relying on an overly simple test such as 30% also doesn’t take into account your personal situation. It can give you a false sense of confidence, or it can unnecessarily stress you out.

       If you’re single, debt-free and plan on living in an expensive city for a short period of time, spending more than 30% of your income on rent may be perfectly fine. But if you’ve got significant child-care and commuting expenses, it could be far too much.

       My other quibble with the 30% rule is that it’s judgy. Maybe living in a bigger, nicer apartment is really important to you, and you can spend more than 30% of your income because you adjust your budget in other ways.

       Cementing the rule’s irrelevancy: as of 2016, almost half of renters paid more than 30% of their incomes on rent, according to Harvard University’s Joint Centre for Housing Studies. That number is likely even higher now given the rental boom.

       To figure out how much you should spend on rent, just sit down and make a budget. Tally your monthly financial obligations and priorities – from groceries and 401(k) contributions to student loans and car payments – and see what’s left over for you to spend.

       One essential you shouldn’t neglect: having on hand an emergency fund to pay several months of expenses. If you don’t have that saved already, then it’s important to allocate a portion of your income each month to create that safety net.

       Now what can you afford to pay in rent? Figuring it out may not be as easy as doing the 30% test – and you may not get the answer you want – but going to the extra trouble could prevent you from falling behind. — Bloomberg

       Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. The views expressed here are the writer’s own.