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How much of your income do you spend on your home(s)? What percentage of your net worth is your home? How has the money questions around your home affected your career (could you take any job you wanted, or are you committed to maintaining your current income level?), or your relationships, romantic or otherwise?
More questions — do you feel like the amount you spend on your home makes sense for your lifestyle? Is it a stretch or is it easy? When you’ve been in the market for a new home, have you been drawn to what you “could” afford, or what is the right size for your household? How much do you feel a pressure to “keep up with the Joneses” when it comes to your home?
{related: not sure what to do first/next in your personal finance journey? here’s our money roadmap}
How Much Income You SHOULD Spend On Your Home, MAX
The rule I’d always heard was that you should pay no more than 30% of your gross income towards rent — and looking around the web now, it looks like the general advice is 28% of your gross income towards mortgage, with no more than 36% of your income towards all debts, including mortgage. (This is called the 28/36 rule.)
How Much Does Your Home Comprise Your Net Worth?
According to The Financial Samurai, the average American has 70% of their net worth in their homes — but the author thinks this is too much: “In my opinion, the ideal primary residence value as a percentage of net worth is no more than 30%. This is a percentage to eventually shoot for as a first-time homebuyer. For veteran home buyers, you can use 30% of your net worth as a barometer for your next house purchase.”
Over to you, readers — do you feel like the amount you spend on your home makes sense for your lifestyle? Is it a stretch or is it easy? When you’ve been in the market for a new home, have you been drawn to what you “could” afford, or what is the right size for your household? How much do you feel a pressure to “keep up with the Joneses” when it comes to your home?
Stock photo via Stencil.