Rent in LCOL City

I know there's a lot of rules of thumb out there about how much you should pay for rent based on your income, but should that be based on base salary or base + bonus? Moving to LCOL city in a month and need a little bit of outside perspective. If I use the 30% of monthly income rule, my rent should be around $1650 for the base but $3150 for the base + bonus. The difference goes a long way in terms of lifestyle/quality of living space and I want to be sure I'm not aiming too low when I can afford a more luxurious place. Coming from a low-income family, I'm a bit paranoid about paying more than $2000 a month for rent because that adds up more than half of my dad's salary haha. What do you guys think? Should I just go based on my base salary and spend a bit more than 30% of my monthly income? How much do you think is too much to spend on rent? 

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Comments (18)

  • Intern in IB - Gen
Apr 29, 2021 - 7:12pm

In a very similar situation, it should be based on your base. Assuming your talking about Texas, Atlanta, Charlotte, or Florida you will be living very very nicely on $1600 and you will still be saving good chunk because of lower taxes

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Apr 29, 2021 - 9:35pm

30% is an average you will see thrown around but honestly, if you are a single guy in your early 20's who is just getting into the workforce, paying 30% in a LCOL city is a lot in my opinion (especially on an IB salary). 30% might be more appropriate once you have a family and a couple kids and need to throw some real cash towards mortgage on a property, but right now?? 

Perception on WSO is skewed because people here generally get paid very well, but throwing 1500+ on rent is a lot. 1650 can probably get you a pretty sweet place in your area given LCOL, but do you really want to throw a 1/3rd of your hard-earned money on a place to sleep every day? That's just my opinion tho and I am likely more frugal than you. I also come from a mid-low income family and the thought of throwing $1600+ on rent is scary... thats like almost 2 mortgages on starter homes in my area. For reference I spent $900 on rent on a 1 bedroom in a LCOL area. Its kind of a crappy apartment but it did just fine for my first two years in IB, and now I can upgrade a little and not feel bad knowing that I was able to save up some nice cash by paying ~15% base on rent.

At the end of the day its all about your money goals and what you feel comfortable doing. Being able to have much cheaper rent in a LCOL area may actually even give you a pretty good advantage on saving compared to your NYC counterparts all things considered...

  • Intern in IB - Gen
Apr 29, 2021 - 10:02pm

Valid points, but to be honest he already said he was in one of the LCOL cities mentioned above and even splurging with $1600 is going give a very solid cushion of savings. Maybe I'm not thinking as frugally, but I'm just thinking from the perspective that most of OPs friends or counterparts in banking would love if they could just scrap together a $1600 shared spot in Manhattan.

  • Analyst 1 in IB - Ind
Apr 29, 2021 - 10:55pm

Just locked down an apartment in a LCOL city. I think the best thing I did was find a roommate. Brought down my costs dramatically and now with ~1100/month each we're able to get a 2b2b in the nicest apartment building downtown. Comparable 1b apartments were about ~1500. Was also a beneficiary of some great rent specials so that helped. Without, it would've been about ~1350 each, or 1800 for the 1b.

Apr 30, 2021 - 12:03am

thinking of daddy's salary as a reference point is gonna be a mental roadblock for ya champ


Look at all these wannabe richies hating on an expensive salad.
Apr 30, 2021 - 2:28am

In a LCOL city you should be able to get a nice place for ~$1000 - $1400 depending on the city. I would recommend optimizing for short commute + convenience as much as possible. Definitely worth paying more if needed as it shaves a lot of time down. Try to get as close as possible to gym+grocery store. Guessing you'll be getting murdered on raw work hours, so saving commute time is critical and difference between being able to eat clean/inexpensively and go to the gym so you don't deteriorate.

  • 1
Apr 30, 2021 - 8:27am

Absolutely no reason to overspend if you can get a decent place for <30% of your base.  I've spent my career in LCOL/MCOL markets and never spent more than like 10% on rent (currently spend 8% in my 30s splitting a modest place in a great location with my wife).  Use the rest to max your IRA contributions and have fun nights out without worrying about breaking your budget.  Living in a luxury building is overrated and having roommates in your early 20s is more fun anyway.  You don't want to be that guy that overspends on rent and then can't afford to go on a bachelor party or meticulously sends venmo charges for every little thing you do with friends etc.

Apr 30, 2021 - 1:20pm

You will get a good place for that amount of money, will be in a good part of town and will be nice and new, or large and older. If you're straight out of school, you could always go for a real small place in a fun part of town and save an extra few hundred a month and either invest it or live the life.

Having a roommate in a 2 bedroom will save you a ton too which is something to consider.

Apr 30, 2021 - 2:14pm

One thing nobody has mentioned here that I've been told by others is that in the super nice apartments (ex. $2500 for 1BR) your floormates will be middle managers rather than the fresh college grads that you probably want to be hanging out with. Not saying to rent a shack lol but keep this in mind if you go too pricey. Use the extra savings for something else that you enjoy.


Apr 30, 2021 - 4:39pm


"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

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