You finally have your own home! It’s a dream come true, but are housing costs included in the budget? Before looking for your own place, it is important to take a closer look at certain costs and make a more specific budget. Insurance, housing costs and taxes often account for the largest part of outgoings. How high should the rent be in relation to salary to ensure there is money for more than spaghetti at the end of the month?
How much rent can I afford?
So that you can find the perfect home or property, it is prudent to first work out how much rent you can actually afford. Setting a realistic budget can save you the disappointment of falling in love with the perfect place that costs more than you can afford.
A rule of thumb in Switzerland is that you should not pay more than a third of income on rental costs. However, as this rule refers to gross income including additional costs, this maximum of one third should be used only by people without debts and who have a secure income or opportunities for promotion in their job.
Budget planning is the first step
While these guidelines are a good estimate, it is advisable to estimate the costs with a personal budget. Although rent is the largest item in most household budgets, the additional costs should not be ignored when planning: car, TV license and insurance are often more expensive than you think. It is best to note down all your income and expenses. You can find this information on payslips, insurance certificates or the latest tax return. Round up to an even number, so there is room for reserves. Your budget should include:
- Net salary
- Additional costs
- Travel costs
- Leisure and holidays
It is best to include any loss of salary in the calculation; for example, if you live with your partner and the costs must be borne by one salary due to job loss, it is better to choose a place where the costs account for a quarter of the salary. This ratio is also recommended by the Swiss budget advisory service (Budgetberatung Schweiz). If the rent is too high in relation to salary, you should look for a new home or a new professional challenge.
You will quickly realise that a good salary does not automatically mean that an abundance of cash reserves is available. Thus, two examples of budget planning are used to show what should be included in the monthly budget for housing costs in Switzerland.
ZH, computer scientist and student (26) working full time, lives with his girlfriend (26), a student who works part time in HR.
- Joint monthly income: average CHF 8,300
- Home (rent, additional costs, insurance): CHF 2,650
- Household (food, cleaning products, television license, etc.): CHF 750
- Taxes: CHF 1,065
- Communication (telephone, TV, internet – Sunrise/Salt, Spotify, Netflix, etc.): CHF 260
- Health insurance (including deductible, excess): CHF 1,200
- Public transport travelcard: CHF 435
- Term fees: CHF 435
- Extras (dentist, contraception pill, presents, leisure, etc.): CHF 450
- Savings/holidays: CHF 1,000
- Total average expenses approx. CHF 8,245
AG, married couple with baby (nine months), man (29) working full time and woman (28) working 70%. Both working in education.
- Joint monthly income: average CHF 9,655
- Home (rent, additional costs, insurance): CHF 2,550
- Household (food, cleaning products, nappies, TV licence, etc.): CHF 1,000
- Baby (clothes, extra costs, etc.): CHF 100
- Taxes: CHF 1,550
- Communication (telephone, TV, internet – Swisscom, Spotify, Netflix, etc.): CHF 320
- Health insurance (including deductible, excess): CHF 1,135
- Car: CHF 400
- Extra costs (dentist, special medical bills, gifts, leisure, etc.): CHF 600
- Savings/holidays: CHF 2,000
- Total average expenses approx. CHF 9,655
Of course, individual priorities may vary. One person may prefer a larger, more spacious home, whereas another may prefer to have enough money for holidays. It is important that the salary covers not only the living costs but all expenses. For more security, follow the 25% rule.
Not enough in the budget? Create a plan B
If the living costs of your dream home exceed your budget, it is worth looking for a housemate, changing jobs or moving to a different location. There are considerable differences between rent levels in the different cantons in Switzerland. If you choose a property with higher living costs, this means earning more or foregoing other large costs, such as a car. Our article on affordable housing includes tips for searching for and finding an affordable rental home.
Have you found your own place and are now ready to live in it? Take a look at our tips for decorating your first home and keeping your budget under control.