Breaking the 30% Rule: The Real Cost of Housing for Millennials and Gen Z

A general rule of thumb is that we should spend around 30% of our monthly wage on housing expenses. But how many of us are spending more – and how many of us are spending much more?

Housing costs can put a strain on many of us. But it’s possible that they’re putting more of a strain on certain demographics than others. 

To understand more about the financial challenges faced by different demographic groups in the United States, we conducted a survey of 1,002 consumers evenly divided between Gen Zers and millennials.

We asked survey participant questions about what percentage of their monthly income is allocated to housing expenses to identify common trends and differences among age groups and genders. Housing expenses typically include our rent or mortgage payments, property taxes, home insurance, as well as utilities. They can sometimes include additional mortgages, co-op fees, and even ground rent. It all depends on an individual’s specific situation. 

We found that over 76.32% of Americans are actually spending over 31% of their monthly income on housing — and many spend even more than that.

Join us as we dive into the data and analyze the results.

• 76.32% of Americans spend more than 31% each month on housing expenses
• 52.97% of Americans spend over half their monthly salary on their homes
• 84.42% of millennial women spend over 31% of their income on monthly housing expenses 
• 9.34% of women spend almost 100% of their income on monthly housing expenses
• 14.58% of Gen Z men and women spend less than 20% per month on housing expenses 

A general guideline suggests we should set aside 30% of our monthly income for housing expenses, which typically include our mortgage payments, property taxes, home insurance, as well as utilities. They can sometimes include additional mortgages, co-op fees, and even ground rent. It all depends on an individual’s specific situation. 

According to the results of our survey, 76.32% of surveyed Americans are spending over 31% of their monthly income on housing costs. It means that over three-quarters of those surveyed are apportioning more of their salary than is expected on housing expenses like mortgage. That suggests that the so-called “30% Rule” is an assumption that doesn’t square with reality for most people. 

Among the Gen Zers we surveyed, 70.37% said they spend over 31% of their income on housing expenses, while far more millennials (81.72%) said the same thing. 

However, if we break this down by gender, it turns out that significantly more women (78.95%)  than men (71.47%) across both age groups spend more than 31% of their monthly income on housing expenses. 

While it may seem that a substantial number of Americans surveyed said they spend more than the monthly 30% budgetary guideline for housing expenses, over half of respondents said they spend more than 50% of their monthly income on housing costs like their mortgage and utilities.

The so-called “30% Rule” is just a guideline and varies according to income. But it’s telling that 52.97% of survey respondents say they are now spending over half their monthly income on housing expenses. That demonstrates that, for many of us, much of our wage is accounted for before we even consider other necessities like food and transportation. 

What’s more, (12.33%) of Americans surveyed said they spend between 51% and 60% of their monthly income on housing expenses. 

More millennials (59.66%) in the survey said they spend over half their monthly income on housing expenses, while only 45.60% of Gen Zers said they do the same. This puts a strain on millennials’ income and could indicate that, while mortgage rates were lower a few years ago, they may have taken out bigger loans.

Broken down by gender, more female respondents (55.08%) said they spend over half their monthly salary on housing expenses, while 47.87% of male respondents said they do the same.

One of the most striking results we found when we dived into the data was that 13.75% of women we surveyed said they spend between 71% and 80% of their monthly income on their housing expenses.

This represents the lion’s share of their income. Another 11.71% of women surveyed said they spend between 61% and 70% of their monthly income on their housing expenses.

This demonstrates that many women — both Gen Zers and millennials — are spending almost four-fifths of their wages on housing expenses, which is enough to put anyone under extreme financial pressure to get through each month. 

The numbers hardly dropped off as we viewed the data for women spending between 81% and 90% of their monthly income on housing expenses, with 10.02% saying this is the case. 

The data showed that men in the survey generally spend less. Only 10.34% said they spend between 71% and 80% of their salary on monthly housing expenses, while 9.72% spend between 81% and 90%. 

Only 2.51% of all men we surveyed said they spend between 91% and 100% of their salary on their monthly housing expenses. And less than half of men surveyed said they spend over 51% of their monthly income on housing costs. 

Meanwhile, 9.34% of women surveyed said they spend almost all their monthly salary on housing costs. This means that almost one-tenth of all women across the different age groups we surveyed are running households they can ill afford. 

When we looked at the differences between Gen Z and millennial women, 7.67% of younger women spend between 91% and 100% of their monthly salary on housing costs, while 11.07% of millennial women spend the same amount.

Women in general spend a larger portion of their monthly income than men on housing expenses. And older women more than younger women say they spend a larger portion of their monthly income on housing costs. 

So far, we’ve focused the analysis of our data on extreme housing costs. But what about those who are spending “little” of their monthly income on their home? 

As it turns out, minimal housing expenses are pretty rare, with only 0.44% of those we surveyed saying they spend up to 10% of their monthly salary on housing expenses. 

Just 10.02% of all respondents across both age groups said they spend between 11% and 20%, while only 10.68% say they spend between 31% and 40% of their monthly income on housing. From there, the numbers start to increase until we reach 81% to 90% percentage when the figures start to drop again. 

Disparities in spending trends appear when we compare the results between Gen Z and millennial respondents. While the overall trend is for people to spend over 30% of their monthly income on housing expenses, most Gen Zers (14.58%) are spending between 11% and 20% of their monthly income on their homes. 

This contrasts significantly with 14.71% of millennials surveyed who said they spend between 71% and 80% of their monthly salary on their house. 

The survey results by gender reveal that 12.54% of men spend between 11% and 20% of their monthly income on their home, while just 8.66% of women do the same. 

The numbers also show that 12.85% of all male respondents said they spend 21% to 30%  of their monthly income on their household expenses, while only 8.83% of women said the same thing. 

What’s more, while the number of women who said they spend between 41% and 60% of their monthly salary on household costs begins to increase, the number of men who said the same thing starts to come down. 

An interesting insight we discovered from the survey results was that respondents from Boston lead the way when it comes to the total mean percentage (64.73%) of their monthly income they spend on housing expenses.

Detroit takes second place, with 63.71% as the mean percentage of the monthly income survey respondents said they spent on housing.

Major cities like Phoenix, Washington, D.C., and Dallas all made the top 10, while Austin came 10th overall, with the mean percentage of monthly income survey respondents there said they spent on housing set at 52.03%. 

In fact, out of the 18 major cities we surveyed, the top 14 cities all had a 50%+ mean percentage of monthly income spent on housing. 

What’s clear from the results of our survey is that an overwhelming number of Americans are spending above and beyond the general 30% guideline when it comes to monthly housing expenses. More than three-quarters (76.32%) of survey respondents said they are spending over 31% of their monthly income on housing costs, while 59.27% of respondents say they are spending over 51% of their income in that category, suggesting financial challenges for many Americans. 

There’s a fairly big divide between major cities, with respondents living in Houston recording a mean percentage of 46.55% of monthly income share spent on housing expenses and respondents living in Boston recording a mean percentage of 64.73% of income spent for the same housing expenses. 

There are also notable spending differences between genders, with female respondents spending more than males. One alarming survey finding is that 9.34% of women surveyed said they spend between 91% and 100% of their monthly income on housing, while 13.75% said they spend up to 80%.

At the other end of the scale, there are few instances of people spending a low percentage of their income on their home. Aligning with the general trends and patterns, though, it’s more men than women who said they’re able to keep their monthly housing expenses down, while more Gen Zers than millennials recorded very low monthly housing expenditures.

“These statistics are deeply troubling,” said Erica Sandberg, CardRates.com Finance Expert. “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.” 

Sandberg says there are a few ways to relieve the pressure. Look for opportunities to earn more, such as participating in the gig economy or taking on part-time work. Every little bit counts. Save as much as possible and be acutely aware of spending. 

“There are no easy answers to how to reduce housing costs, but look into first-time homebuyer programs,” said Sandberg. “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.”

Our aim was to find out what percentage of respondents’ monthly income goes toward housing expenses. We questioned 1002 U.S. consumers aged 18 to 43, with quotas of 500 Gen Z and 500 millennials, asking them, “Approximately what, if any, percentage of your monthly income goes to housing expenses?”

Our survey employed a multiple-choice format, allowing respondents to select the best option that applied to them.

The data was then segmented by gender and location to identify patterns and differences in user experiences.