Smart is the New Rich: Money Guide for Millennials

Chapter 6House Money

40%

Share of the typical millennial budget going to rent or housing costs.

Let's begin with the single best personal finance move you can make today: living at home, with extended relatives or roomates. Typical millennials are spending way too much on their housing costs—on average spending 40 percent of their budget on rent, according to Level Money. For millennials who live in expensive cities like New York and Silicon Valley, the percentage can be more than half. A conservative guideline for how much of your money should be going to shelter each month is 28 percent of your pay. Some financial experts say pushing to 35 percent is reasonable in the high-cost Northeast and Silicon Valley.

You've got to get the housing costs down. Live at home, double or triple up with roommates, or live in your great-aunt's attic. Until you've got student loans under control or you've found a decent job in your major, getting a handle on housing costs is the single most critical way to live within your means.

It's smart, and it is trendy. A record 57 million Americans live in households with more than one generation, according to Pew Research. It's a return to the old days when multiple generations living under one roof made economic sense and was a social custom. My mother and grandmother each grew up with grandparents in their homes. In numerous cultures and at various ...