The number of renters dedicating at least half of their income toward housing hit a record high of 11 million people in 2014, according to the annual State of the Nation’s Housing Report from the Joint Center for Housing Studies of Harvard University.
A total of 21.3 million are spending 30% or more of their paycheck to cover the rent — also a record high.
Personal finance experts generally suggest budgeting around 30% of monthly income to cover housing costs.
But that’s getting harder to do with rent prices rising faster than wages.
Losing such a large portion of a paycheck to cover housing means cutting back in other areas.
“When you have to dedicate such a high proportion of your income to rent every month, it forces you to make difficult decisions,” said Dan McCue, a senior research associate at the Joint Center.
Not only does that mean less spending on essentials like food, clothing and health care, it also makes it tougher to achieve long-term financial security by saving for an emergency fund, a down payment or retirement.