Dear New Frugal You,

I just found an article you wrote on budgeting. You said to spend no more than 33% of your after-tax salary on housing. I'm ready to live on my own and have started looking for my first apartment. I've never kept a budget and don't really understand how much I can afford to pay for rent. Can you explain why 33% is a magic number, and how I can know what rent is affordable? 

-Mike

Dear Mike,

You're wise to be concerned about how much you spend for an apartment and smart to analyze the situation before you sign a lease. Making a mistake now could drastically limit your financial options for years to come.

What you spend on housing can very easily upset your whole budget. There are three big budget items for most families: housing, transportation and food. Among them, they make up around 55% to 60% of your budget. Everything else needs to fit in the remaining 40%.

Unless you seriously overspend, it's to avoid permanent damage in the smaller expense categories. An occasional splurge is just that -- you haven't committed to making serial splurges over and over, so the damage is limited. But with a lease or an auto loan, it's easy to overcommit and find it very hard to get uncommitted. You can put yourself in a situation in which all of the smaller budget categories need to be cut to live within your income.

As far as budgeting goes, we're not going to take the time here to go into detail, except to say it's not as hard as you might think. See "Your first budget in three easy steps" for a quick primer. But you will need to figure out what your take-home pay is each month. Unless you get paid monthly, you'll need to do a little simple math.

To figure your monthly pay:

*If you're paid weekly, multiply your weekly take-home pay times 52, then divide by 12.

*If you're paid biweekly, multiply your take-home pay by 26, then divide by 12.

Once you have the monthly take-home pay figure, multiply it by .33 to see how much you can afford for housing. Keep in mind when I say "housing," that's not just rent. You also need to include utilities, insurance and any other house-related expenses. So add those estimates to your rent.

Now, how did I arrive at the 33% figure? Experts have been suggesting sample budgets for decades. Not surprisingly, there's a pattern that seems to work best. For most people, the range for housing is about 30% to 35%.

Some people can stretch that to 40%, but that's probably not a good idea for you. Reaching for a too-expensive apartment while you're young could keep you from accumulating an emergency fund or participating in a 401(k) retirement plan.

And finally, before you go off in search of the perfect apartment, I'd like to arm you with five tips for making it more affordable and the transition easier.

*Take a dry run. Pretend that you're already in the apartment financially. For the next month or so take an amount similar to your apartment expenses and set it aside. See if you can live on what's left. If you can't do it now, you won't be able to do it later when you've signed a lease.

*Consider all your options. Living alone in a one-bedroom unit in a large complex is only one choice. You might find it cheaper to share a two-bedroom with a close friend or three.

*Don't dismiss uncommon arrangements. Some landlords are willing to give you a break on rent for a certain amount of work each month. It can't hurt to ask.

*House-sitting, anyone? Do a little research to see if any house-sitting jobs are available. Occasionally you'll find people who will let you stay in their home rent-free as long as you watch over the property.

*Save for startup expenses. For instance, it might be the first time that you'll buy a broom or a kitchen table, but believe me, you will need one.