For many, finance can be a very tricky field. In fact, most people end up in debt, or living above their means. While it is ideal to save a minimum of 25% of your income, most people are incapable of doing better than 10%. Now remember that this is a percentage, meaning that it has nothing to do with how much you make, strictly with how good you are at budgeting and saving. Now while it can be difficult to master your finances, it is far from impossible. Remember a good common finance rule, that you ideally should save one dollar for every three that you earn. One of the most common things that prevent people from maintaining this ratio, is that they pay far too much for their housing costs.
Traditionally, most financial advisors and experts usually say the rule of thumb for housing costs is to spend only a third of your income on it. For a lot of people however, this is far too much money, especially when you consider things like car and student loan payments, child support, and business expenses. While each person’s individual budget and housing needs differ, it is more realistic that you should only be spending about 25% of your income on housing expenses if possible.
If you are having trouble spending less than 30% plus of your income on housing, start looking for ways to save. This could include cutting down on electricity costs, being more conservative with food, or simply seeking more affordable housing.
John Labunski is a finance expert who often comments how housing costs can be budget killers.