This is the maximum money you should pay in a rental: this is how the ’40 times rule’ works

Despite the increase in the price of electricity and its also detrimental effect on the shopping basket, the most important expense that a person who does not own a home has to make is rent. It is a payment that marks the personal economy in all its aspects, from savings to consumption, and which is in the center of all the focuses due to its high amount.

So much so that there are many theories and methods that deal with rent: both to spend the least amount possible and to determine what the spending limit should be on that concept. One of them is called as ’40 times rule’.

This rule aims to determine what is the maximum amount of money that a person should spend on rent: your monthly rent should not be higher, multiplied by 40, than the amount of your annual salary. The worker must at all times look for rentals that allow him to adjust to these spending limits.

If he can comply with this ’40 times rule’, the citizen will have a relatively adjusted rent and could distribute the rest of his salary in other concepts (expenses on food, bills, culture, leisure, tourism …) in a more way or less reasonable and without suffering financial hardship.

To calculate the amount that should ideally be paid as a limit, we must go to our net annual salary (the gross does not count, since it does not refer to the amount of money that can be spent) and divide it by 40. With this operation would have that maximum rental amount:

-If a person charges 15,000 euros net per year, his maximum amount of rental expense should be 375 euros per month.

-If a worker has a salary of 20,000 euros net per year, the maximum rental price that he should pay is 500 euros per month.

-With an annual net salary of 25,000 euros, a worker could pay a monthly rent of up to 625 euros.

With these figures, the difficulty of obtaining a rent of an amount that complies with the ’40 times rule’ is evident. According to the index prepared by Idealista for the month of November, the average rental price in Spain was 10.5 euros per square meter, so the previous examples would leave workers with options to rent flats of 37, 47 and 59 square meters, respectively, not counting that in large cities the prices may even be higher.

The other alternative, of course, would be to share a flat with strangers, a friend or our partner. Otherwise, the limit set by the ’40 times rule’ cannot be met.

That is why this method talks about what an ideal situation should be (That a worker spends at most those amounts established for rent) and not one that can be easily applied in real life. Rather, it is an index that marks what would be adequate so as not to make rent a disproportionate expense.