There’s a fairly fixed amount you should pay on housing, whether you buy a house, rent an apartment or otherwise obtain shelter. Most personal finance experts will tell you that you will wind up spending one-third of your income on housing.

As a general rule, one-third of your income is a good number to use when you’re shopping for a house or an apartment. But it may be a bit over-simplified. There are a few facts you should keep in mind when planning your housing budget.

Are you calculating that one-third before taxes?

When you are calculating just what one-third of your income is, don’t use the number that your boss told you when she hired you. That’s your gross income. You want to spend one-third of your net income on housing — that’s after taxes, benefits and everything else that both your employer and Uncle Sam take out of each paycheck.

Furthermore, your mortgage payment or your rent shouldn’t precisely equal one-third of your income — even if it’s one-third of your net income. You need to budget in maintenance, insurance and all of the other costs of owning a home. It can add up surprisingly fast, too. People who assume that they can handle a mortgage payment of one-third of their gross income can face some nasty financial surprises down the road — much worse than the surprise that you can’t afford quite as much house as you previously thought.

Feel free to ignore me, though.

In some real estate markets, spending one-third of your net income on housing is a pipe dream. Much of the East Coast suffers from this situation: housing that is affordable if you stick to the one-third rule has far worse problems than small size. And it is possible to comfortable pay a higher portion of your income for housing, if you’re willing to bit the bullet and budget carefully. Living frugally is an absolute must — if you’re paying more for your home, there’s less in your bank account for food, utilities and entertainment.

In contrast, some people can afford to spend less than one-third of their income on housing. I’ve noticed that many people in this group, though, chose to spend that full third anyhow — partially as a lifestyle choice, partially out of the habit of keeping up with the Jonses. If you’re in the sort of tax bracket where you can get a perfectly comfortable house for less than one-third of your income, I fully encourage you to live beneath your means. You will wind up ahead of the game if you can put that money into savings. The wonders of compound interest can translate a smaller house into early retirement surprisingly quickly.

No matter your income and location, you do have an element of choice when it comes to housing. Take a long look at your housing budget before you make a choice and go for the best option for your lifestyle. I just recommend making every effort you can to keep your housing costs below that one-third mark.

There’s no question that everyone is looking for ways to tighten their belts these days; even if you are on comfortable financial footing, you may have noticed that frugality and budgeting make for a simpler life style. One of the biggest expenses every person faces, month in and month out, is housing. Not only do you have to pay rent or a mortgage, you have to pay utilities (in a time of rising energy costs — ouch!) as well as at least a few maintenance costs. But, for most of us, there are a few spots that we can reduce the amount of money we need to budget for our monthly housing needs.

1. Reduce utilities. The majority of American homes have a passing familiarity with energy efficiency at best. The fastest bill that you can cut is your utilities: even without upgrading to energy efficient appliances, you can still make a significant dent in your bill. Start by turning off and unplugging appliances you aren’t using — and make an effort to use less appliances in general. Rather than running your dryer, hang up a load of laundry or two to dry. Little tricks like this can significantly cut an energy bill.
2. Choose a smaller space. Smaller homes (apartments or houses) are often cheaper in just about every way. Of course, choosing a smaller space can be expensive — if you need to actually move all your stuff to a smaller home. You can get a portion of the benefit, though, by using a smaller portion of your home. For instance, if you aren’t using your guest room on a regular basis, why bother to heat it or cool it — or even plug in the clock radio in there? Simply shutting down a room that you don’t actually use can save you a little bit of cash.
3. Get a roommate. If you really aren’t using that room, why not rent it out? Bringing a roommate into your home can cut some significant costs. If you, in turn, are renting your home, you may need to check that your lease allows you to do so, but if you own your home, you can bring in as many boarders are you want.
4. Get rid of storage units. Even if your storage unit is a room in your home, you’re still losing money on that space (hey! you could be renting it out to a roommate!). But it’s much worse if you’re renting a storage unit just to house all your junk. The majority of storage units are used to hold junk that you don’t need — I’ve seen people pull a dumpster up to their storage unit and just pitch everything numerous times. And you may even be able to make some money off your stuff — try eBay or Craigslist.