If you keep up with personal finance guidelines, you might have heard about the “30% rule.” It recommends that you put no more than 30% of your monthly salary toward housing costs. The rule sounds good in theory, but getting there is not always easy. In fact, many Americans spend much more than that on rent or mortgage payments, according to a new study, including a majority of millennials and Gen Zers.
Learn More: 10 Housing Markets Buyers Are Flocking To as Rates Drop
Find Out: How To Start Investing in Real Estate – Even If You’re Not Rich
The study, conducted by CardRates.com and released in June, was based on a survey of 1,002 U.S. consumers ages 18 to 43, with quotas of 500 Gen Z respondents and 500 millennial respondents. All were asked the following question: “Approximately what, if any, percentage of your monthly income goes to housing expenses?”
The vast majority of respondents (76.32%) replied that they spend more than 30% of their salary each month on housing expenses. Most (52.97%) spend over half their monthly salary on their homes, including 60% of millennials and 46% of Gen Z.
The problem is especially prevalent among women, the study found. More than 9% of millennial women spend nearly all of their income on monthly housing, while 84.42% spend over 31%.
Read Next: 5 Housing Markets That Will Plummet in Value Before the End of 2025
Here are some of the other key findings:
- 12.33% of all respondents said they spend between 51% and 60% of their monthly income on housing expenses.
- 12.85% of all male respondents said they spend 21% to 30% of their monthly income on housing expenses, while only 8.83% of women said the same thing.
- 13.75% of all women surveyed spend up to 80% of their monthly income on housing.
- 14.58% of Gen Z men and women spend less than 20% per month on housing expenses. This is partly because many of the youngest Gen Z respondents either still live at home or are in college.
In terms of where respondents spend the most on housing, Boston ranks first. Respondents there spend a mean percentage of 64.73% of their monthly income on housing expenses, according to CardRates.com. Detroit ranks second, at a mean percentage of 63.71%.
One of the study’s conclusions is that expensive housing costs have forced many younger Americans to cut way back on other budget expenses.
“These statistics are deeply troubling,” Erica Sandberg, Finance Expert at CardRates.com, said in a statement. “The more money people spend on housing, the less they have for essential bills and for enjoying life. Unfortunately, sometimes people put the difference on their credit cards, and then rack up expensive consumer debt.”
The problem has a snowball effect on many other areas of personal finance. A separate analysis from PNC Bank, released in October, found that more than 60% of U.S. millennials and Gen Zers are living paycheck to paycheck.
Meanwhile, nearly half (46%) of Gen Zers rely on financial assistance from parents and family, according to new research from Bank of America. Many Gen Zers said they are delaying milestones and are not on track to buy a home (50%), save for retirement (46%) or start investing (40%) within the next five years.
If you’re stuck with high housing costs, there are a few ways to relieve the pressure. Sandberg recommends looking for opportunities to earn more through side gigs or part-time work. When it comes time to buy a house, taking certain proactive steps can help solve a lot of problems.
“There are no easy answers to how to reduce housing costs, but look into first-time homebuyer programs,” Sandberg said. “By keeping your credit in good standing and elevating your income, you may be able to purchase rather than rent, and — depending on the program — with no or low down payment. There is nothing wrong with tenancy, but as an owner, you will be building equity — and wealth — with each payment you make.”
More From GOBankingRates
- 3 Things You Must Do When Your Savings Reach $50,000
- 12 Old Navy Clothing Items You Should Buy in November To Maximize Savings
- The 5 Most Expensive End-of-Year Money Mistakes, According to Financial Advisors
- 2 Changes Are Coming to Social Security in 2025
This article originally appeared on GOBankingRates.com: The Real Housing Cost for Gen Z and Millennials — and How It Impacts Their Budgets
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
