Is Spending 30% On Rent Too Much?
A popular standard for budgeting rent is to follow is the 30% rule, where you spend a maximum of 30% of your monthly income before taxes (your gross income) on your rent. This has been a rule of thumb since 1981, when the government found that people who spent over 30% of their income on housing were "cost-burdened."
Is 30% rent realistic?
Most financial experts recommend spending around 30% of your gross monthly income on rent (note that gross is different than net income—gross is your income before tax).
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CBS MoneyWatch recommends not exceeding 3 to 4 percent of your gross income for utilities. Most people spend between 30 and 35 percent overall on rent and utilities.
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Most people are advised to keep their housing costs to 30% of their income or less. I used to spend around 50% of my earnings on rent, but it didn't hurt me financially. Keeping other bills low, like spending less on food and gas, can help your budget.
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Families who pay more than 30 percent of their income for housing are considered “cost burdened” and may have difficulty affording other necessities including food, transportation and medical care, according to the Department of Housing and Urban Development.
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