I Used to Spend Around 50% of My Income on Rent. Here's How I Made It Work

A young woman working at a small desk in the living room of her apartment.

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It's possible to get by financially even when rent costs you a fortune.

Key points

  • 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.

As someone who writes about personal finance, I often find myself repeating one important mantra: Don't let your housing costs exceed 30% of your take-home pay. Now to be clear, by "housing costs," I'm talking about predictable expenses. If you're a homeowner, that 30% covers your mortgage payments, property taxes, and insurance. If you're a renter, it covers your rent payments and renters insurance (which doesn't tend to be nearly as expensive as homeowners insurance).

But there was a time in my life when I most definitely broke the 30% rule. Back when I lived in New York City, I rented a tiny studio where rent ate up about 50% of my income. In spite of that, I was able to manage my bills, avoid debt, and even save money in the process. Here's how.

It's all about making choices

The reason I lived in New York City was to be close to my office. I'm not a city person by nature, and I'm certainly not a fan of cramped spaces, which Manhattan is notorious for. But at the time, renting in the city made sense, even though my tiny apartment cost a small fortune.

But while I wound up having to spend about 50% of my earnings on rent, my finances didn't take a hit. The reason? I kept the rest of my bills low.

These days, I live in the suburbs, and I spend a lot of money on car insurance, gas, and maintenance for my vehicle. When I lived in New York City, I spent virtually no money on transportation because I walked a lot and almost never got in a taxi. (Fun fact: In NYC, you'll often get to your destination faster on foot than by car.)

Additionally, I spent virtually nothing on electricity because my apartment was tiny. And I got a bare-bones cable plan for entertainment but didn't pay for a bunch of extra channels or features.

I also did my best to spend minimally on food. New York City is home to thousands of restaurants. At some of them, you'll have to spend $500 on dinner to walk away feeling full. But some eateries in the city offer great value, and when I did meet friends out for dinner, we chose affordable dining spots. Plus, I did a good job of planning out my meals and cooking on the cheap so that I often had leftovers to bring to work for lunch (whereas my colleagues would spend $15 a day on a sandwich).

All told, the high cost of my rent was offset by a very frugal lifestyle all around. So despite spending about 50% of my earnings on my studio, I was able to add money each month to both my regular savings account and my retirement plan.

Setting priorities

I still stand by the idea of keeping your housing costs to 30% of your income or less. But if that's not feasible based on where you live, you don't have to resign yourself to landing in debt if your rent or housing payments cost more. Instead, you may be able to find ways to keep the rest of your bills low.

Start by mapping out a budget that accounts for all of your monthly expenses. If you can find a way to make the numbers add up, you may be able to get away with spending a larger chunk of your money on housing if needed. For me, that involved cutting back on things like my food and transportation costs. Your situation may be different, so take a look at your own needs and lifestyle, and see where you might be able to trim some money.

It's also worth noting that a lot of people have the option to work remotely these days, and that could help you avoid having to pay a premium to rent (or buy) a home in a major city. Back when I lived in my studio, remote work just wasn't a thing. But if you don't like the idea of having your rent eat up half of your paycheck, you might be able to find a way around it by making some extra room in your budget.

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