How can I budget when my rent is so high? (2024)

"Ask Brianna" is a column from NerdWallet for 20-somethings or anyone else starting out. I'm here to help you manage your money, find a job and pay off student loans -- all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to [email protected] .

A huge portion of my income goes toward rent, and I already have a roommate and am not able to move right now. How can I manage other financial priorities, like paying off debt, with such high housing costs?

For some readers, this question might summon a vision of 20-somethings in New York or San Francisco eating avocado toast in sleek, outrageously priced apartments. But not all cash-strapped renters live in major cities. And not all city dwellers struggling to afford rent lead lavish lifestyles.

In 2015, almost half of all U.S. renters were cost-burdened, meaning they spent more than 30 percent of their income on housing, according to the Joint Center for Housing Studies of Harvard University. That's largely because earnings haven't grown at the same pace as housing costs. In New York, for instance, renters' median household incomes rose 6.6 percent from 2005 to 2015, while median gross rents shot up 18.3 percent, according to the NYU Furman Center.

Maybe moving to a different apartment or city would be too expensive now. In the meantime, try these budgeting strategies so you can pay the rent, then make room to build savings and reduce debt.

First comes saving

The 50/30/20 budget recommends spending no more than 50 percent of your earnings on necessities like housing, food and transportation; 30 percent on wants; and 20 percent on debt repayment and savings. But when you enter your information into a budget calculator , rent might take up nearly the entire "necessities" category. That means you'll likely have to cut back on your "wants" -- but don't scrimp on savings and debt repayment.

Saving now means building a cushion that prevents you from taking on more debt and that can help you afford to buy a place someday. To start, make sure you've got at least $500 in a rainy-day fund. That helps you avoid charging unexpected expenses to a credit card.

Next up is saving for retirement. If your employer offers a match on 401(k) contributions -- say, up to 3 percent of your income -- designate at least enough to capture the match.

Then comes slashing debt

Once emergency and retirement savings are on track, you're ready to pay extra toward debt.

One way is to prioritize what to pay down based on interest rate. Aim to eliminate credit card balances first, which often have the highest rates. If you still have money left over, add to your rainy-day fund so it covers three to six months of essential expenses, and increase retirement savings.

Cut other expenses

Sure, you can try to cut back on boozy brunches or buying books to free up some cash. But limiting larger-ticket items, such as car-related costs, may get you further, says Eric Tyson, author of "Personal Finance for Dummies."

The average loan payment for a new car was $509 a month in the first quarter of 2017, according to credit reporting agency Experian. You'll save money by buying used, and by shopping around for cheaper car insurance. Often, larger cities have both pricey rents and solid public transportation. If that's true of yours, take advantage of the latter by avoiding car ownership for now.

Searching for a better cell phone plan might also yield savings. Carriers often change their offerings, and plan prices are more and more competitive, Tyson says.

Re-evaluate your city

Finally, think long term. Rent doesn't have to be the expense you organize everything around forever. Every year, take stock of whether your location makes sense for your career, says Jessica Landis, assistant vice president of financial planning at Janney Montgomery Scott , a financial services firm headquartered in Philadelphia.

You may live in a place that has lots of opportunities for professional advancement. "However, put a time frame on the high expense," she says. "If the area or position is no longer serving you, consider looking for other options."