Gen Z Allocates 37% of Income to Housing: Housing costs a lot these days, and it’s affecting many people’s money. New data from McKinsey reveals that Gen Z (people under 25) allocate 37.3% of their income towards housing.
Gen Z Allocates 37% of Income to Housing:
That’s more than the recommended 30% of income that experts say should be spent on housing, but it’s not the younger generation’s fault for spending too much on housing. The price of homes went up by 27.7% in the last three years and is now $431,000.
Interest rates going up has made it harder for people to afford housing. This has stopped a lot of people from buying homes, especially those who are buying for the first time.
Rent prices have increased a lot in recent years, which is bad for Gen Z. According to The Wall Street Journal, rent prices in cities increased by 17.8% during the pandemic, while in the suburbs, they went up by 25.8%.
Housing prices have gone up a lot, which has made it harder for many Americans, including Gen Z, to afford housing.
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Experts say you should spend less than 30%
Chase Bank says that it is recommended to spend no more than 30% of your income on rent. This suggestion came from a government report in the 1980s. The report found that Americans who spent more than 30% of their income on rent were considered “cost-burdened.”
If you spend over 30% of your income on rent, it can be harder to pay for other things like credit card bills, food, and utilities.
What should you do if you need to spend more on housing?
McKinsey says that Gen Z’s median yearly income is $38,325. Many people find it hard to follow the 30% rule. Spending more on housing might not be a good idea, but some people can’t avoid it. If you’re in this situation, here are some suggestions to possibly make things better.
Improve your negotiating skills
Some people don’t know that you can negotiate your monthly rent. I lowered my rent price before signing the contract and made the rental agreement month-to-month. You might not be able to reduce your rent now, but when you renew your lease or find a new place, try negotiating before you sign.
Assess current spending
Looking through your expenses to find things you can stop spending on is basic budgeting. It can help you find extra money to pay for rent. You might have a couple of subscriptions that you don’t need. Budgeting apps track costs and help you find expenses to cut out.
Be creative to make more money
There are many good apps that can help you earn some extra money each month. I use Fiverr to find more freelance writing jobs. There are some good platforms for gig workers to help pay for housing, no matter what skills you have.
Housing costs are affecting both Gen Z and many other Americans. That’s why it’s really important to use a budgeting app to track your expenses and find ways to spend less. You might not be able to spend less than 30% of your income on housing, but making some changes could improve your finances.
