Forget coffee and avocado toast -- most people blow nearly 40% of their money in the same place

  • Housing accounts for 37% of the average American's budget.
  • The standard measure of housing affordability is 30% of pre-tax income.
  • Self-made millionaire Grant Sabatier of Millennial Money saved $25,000 in two years by limiting his housing expenses even further.

There's one area where almost everyone in the US overspends, and — spoiler alert — it isn't coffee. Or avocado toast, for that matter.

The biggest chunk of the average American's budget goes toward housing, which accounts for 37% of take-home pay. Many people spend even more.

In some circumstances, spending a lot on rent or a mortgage is unavoidable. But in many cases, making a few sacrifices on housing expenses today could lead to significant savings — and a far more comfortable future.

RELATED: Check out the most expensive zip codes for US renters:

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17 most expensive zip codes for renters
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17 most expensive zip codes for renters

#17: 10028
Manhattan, New York

Average rent: $4,014/month

Photo credit: Getty

#16: 94158
San Francisco, California 

Average rent: $4,070/month

Photo credit: Getty

#15: 10022
Manhattan, New York

Average rent: $4,097/month

Photo credit: Getty

#14: 10010
Manhattan, New York

Average rent: $4,166/month

Photo credit: Getty

#13: 10003
Manhattan, New York

Average rent: $4,178/month

Photo credit: Getty

#12: 02199
Boston, Massachusetts

Average rent: $4,227/month

Photo credit: Getty

#11: 10001
Manhattan, New York

Average rent: $4,373/month

Photo credit: Getty

#10: 10036
Manhattan, New York

Average rent: $4,375/month

Photo credit: Getty

#9: 94105
San Francisco, California

Average rent: $4,380/month

Photo credit: Getty

#8: 10013
Manhattan, New York

Average rent: $4,422/month

Photo credit: Getty

#7: 10002
Manhattan, New York

Average rent: $4,441/month

Photo credit: Getty

#6: 10024
Manhattan, New York

Average rent: $4,535/month

Photo credit: Getty

#5: 10025    
Manhattan, New York

Average rent: $4,535/month

Photo credit: Getty

#1: 10282
Manhattan, New York

Average rent: $5,924/month

Photo credit: Getty

#4: 94129
San Francisco, California 

Average rent: $4,762/month

Photo credit: Getty

#3: 10023
Manhattan, New York

Average rent: $4,892/month

Photo credit: Getty

#2: 10065
Manhattan, New York

Average rent: $4,898/month

Photo credit: Getty

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Take, for example, Grant Sabatier, a 30-something self-made millionaire who founded the finance blog Millennial Money. He was able to save about $25,000 in two years by cutting back on housing, as well as transportation and dining expenses.

"At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference," Sabatier wrote on Millennial Money.

He continued:

"While I don't have the exact figures, I estimate that cutting back for 2 years, before buying my first home, I was able to save about $25,000 that I invested in 2011 and 2012, and that 'cutting back' is now worth more than $100,000 in my investment accounts. I'm going to continue to let it grow and hopefully making that decision 2 years ago will compound in 20 years into a lot more money."

Saving enough over a 40-year career to maintain your lifestyle in retirement is challenging enough. There's no shortage of advice about how much you should be saving, typically 10% or more of your income. But with the current US savings rate at 5.3%, according to the Federal Reserve, many Americans will come up short.

But there's a lot to be learned from people like Sabatier who have managed to hit their savings goals well before age 65.

Rather than depriving yourself of coffee and avocado toast (though you might want to do that as well), take a hard look at how much you're paying for housing right now. If it's more than 30% of your pre-tax income, the standard measure of housing affordability, then it's time to make a change.

To really make progress on your savings goals, however, you'll want to limit your housing expenses even further. Look for a place that costs 25% or less of your after-tax income, and funnel all of the cash you save toward your retirement accounts.

In some parts of the country (hi, New York and the rest of the Northeast), the percentage spent on housing can be even higher than the 37% average. But that doesn't mean it's impossible to find affordable options, even if you have to have multiple roommates or a longer commute.

Keeping housing costs low is smart, no matter how much money you have. Billionaire investor Warren Buffett lives in a modest house that's worth .001% of his total wealth.

The best financial move you can make is to literally move to a less expensive home. Once you do, you can celebrate at your local coffee shop.

NOW WATCH: Warren Buffett lives in a modest house that's worth .001% of his total wealth — here's what it looks like

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SEE ALSO: Here's how much money you need to save to retire on a beach and play golf all day by age 40

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