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Yip, this definitely a VERY small allowance. Most expats lured abroad to the KSA look for at least 100,000 SAR as an annual housing allowance for a 1-2 bedroom apartment - though this pricing structure is normally associated with compound living. With that in mind, you should realise that living in Saudi outside of a compound can feel very isolationist.
Still, if you don't mind living in an apartment in Jeddah, than you should ask for at least 32,900 SAR - this was the average rental rate recorded in the city by AMEinfo.com in 2011 for a two-bedroom apartment. This doesn't include a deposit or utilties.
You will get housing at this price but it will be a 1 room apartment in the old area of the city where most of the factory and labour live. This is ok if you are looking for 'cheap' and have a desire to mix in a very ethnic society. If you are looking for experience and to cut cost to a minimum this is the place - you can eat ethnic food for pence, living cost will be very low but it is right in th centre of the heat of the city.
You mentioned you want ot be near a school but there are 100's of schools here catering for all nationalities and they are all over the city so without further information i can not help on this front.
If you want to be in a European community then the information already posted is correct.
I am not aware people with large house rent out rooms, but people on single status contracts do share houses and so reduce the costs.
Hope this helps
Housing in the ecenomic end of the expat compound market is around SAR 30,000 - 40,000 a year so that might be in your budget and you can work upwards from there. Also you can buy a car for any price here - you get what you pay for so small and old is cheap - big and new is expensive!
If you a married then you can go everywhere and do everything with your wife - the restrictions are for single men/women only.
David
If the job is what you want and there is room for career progression I don't think it is necessarily a bad idea, especially as your food and accomodation are provided.A room in a shared apartment will cost you around SAR 1,100. I am not sure who much you spend each month on food but I am sure when you add that in, there is not much difference between the two salaries.
You will simply need to factor in transport costs and what you usually spend on other activities each month and then see if SAR 3,200 is enough.
Take a look at our Cost of Living in Saudi Arabia page for more information.