9 Ways to Save Money While Renting
With inflation jacking up the price of groceries to gas and beyond, just about everything has more expensive these days - and rent is no exception.
According to the most recent Realtor.com rental report, the median rent in the 50 largest U.S. cities has been setting record highs for 17 months straight, currently hovering at $1,879.
With numbers like that, finding ways to save money while renting - to buy a house, pay for a vacation, or fund other life goals - may seem like a daunting exercise in self-deprivation. But experts insist that today’s renters can still amass some cash reserves without feeling much of a pinch. It all comes down to pinpointing your priorities, and shedding the rest.
Renters just need to focus their search on what they need, and perhaps as importantly, what they can live without.
If you’re facing high rent but still want to build wealth, try these smart strategies below. You might be surprised how quickly you can amass the nest egg you need.
1. Pay your rent with a cash-back credit card
Ever heard renters are “just throwing their money away on rent”? One way to start earning some money back is by paying your rent with a credit card that allows you to earn either cash back or rewards that can be converted to usable benefits.
Many of my clients in rental buildings autopay their rent using cards to accumulate rewards points.
But beware: There are a few caveats. Some rental systems will charge an additional fee for paying rent with a credit card versus a debit card, so you’ll want to read the fine print. Also, you have to commit to paying off your credit card balance in full every month. Otherwise, it defeats the purpose since you won’t be saving anything if you carry a balance and get charged interest on your rent.
2. Ask if you can use an alternative security deposit
In addition to ponying up first and last month’s rent, most tenants will need to put down a security deposit - that’s to pay for any repairs landlords may need to do in case tenants leave the place a wreck when they move out. But there is another (less expensive) option: security deposit insurance, where you pay a monthly premium that protects the rental against any damages.
3. Try hosting or house hacking
Got extra space in your rental, or even a basement or garage? Then that’s an untapped opportunity to make some cash.
Renters can save money on their rent by house hacking, which includes things like renting out an extra bedroom on a short-term basis or renting out storage space in the garage or basement. Though this term is more commonly used when buying a home, with the proper permissions it can be done with renting as well.
5. Shop around for a more affordable rental
If your rent is high, it may simply be time to see if you could find a cheaper rental elsewhere that suits your needs. This is especially true if your rental has amenities you don’t really use that could be keeping your current rent higher than it has to be.
Ask yourself: Do you need to rent the newest, apartment on the best floor with the most amazing view? An older apartment on a less desirable floor that doesn’t have a view may save you a small fortune.
While giving up a swanky apartment with all the bells and whistles may feel like a sacrifice, a little bit of belt-tightening now can pay off a lot later on.
By forgoing your dream apartment, you can then save and invest the extra money.
6. Work remotely? Move to where rents are cheap
The rise of remote work may free up many of us to move further away from the office, and if you can relocate from trendy downturn areas, you can save a nice chunk on rent.
How much can you save? In the year leading up to the pandemic, urban rentals were priced 12% higher on average than suburban rentals, with some major cities seeing even bigger gaps. During the pandemic, the premium for living in the “hottest” areas dropped to 4%, but it’s now back up to 5.8% - and climbing steadily.
If you can’t stand the idea of leaving downtown, it’s not going to cost you as much additionally to stay as it used to. But still, moving to the suburbs can save you a lot of money. If you’re even more flexible, consider moving to a less affordable metro altogether.
Rents in the priciest five markets out of the top 50 are 2.5 times as expensive as the most affordable five markets, highlighting how much location factors into rental costs.
6. Find a roommate
Living alone can really cost you. Case in point: Rents on studio units continue to grow at a faster rate than 1- and 2-bedroom rents, especially in urban areas of major cities.
Finding a roommate is another way o save, as the costs of sharing a two-bedroom are not as high as renting two separate one-bedrooms or even studios. Having a roommate means you’ll also benefit from splitting utilities, internet, cable, and other expenses.
7. Think small
While having extra space or rooms can feel luxurious, it can also cause you to stretch your budget. Do you really need a ton of space, or is it a want?
Not only are smaller apartments or homes typically less expensive to rent, they are also less expensive to furnish, heat and cool. Consider downsizing from what you have as a way to save money. Although studio rents are now growing after than one- and two-bedroom rentals, they remain less expensive than larger units. So giving up a bedroom you won’t use the time can help you save.
8. Keep an eye on your utility usage
No, we’re not suggesting you need to sweat in the summer and freeze in the winter. However, turning the temperature up or down a few degrees can actually pay off - especially since the Bureau or Labor Statistics found that the average American household spent $4,158 on utilities in 2020.
Be mindful of your utilities. Saving where you can with air conditioning or heat goes a long way for your budget, and helps you get a good feel for what a bigger place may be like.
This also holds true if you’re renting a house instead of an apartment.
If you’re renting a single family home, utilities can be quite expensive and a shock for some people moving from an apartment. Some cities allow renters to select a lower cost, smaller-sized package for things like garbage, compost, and recycling, and you can also invest in smart sensors to keep utilities lower.
9. Eliminate debt with free financial counseling
If you’re carrying a high balance on credit cards, that means you’re paying interest that can really eat into your savings. But help is out here, and it’s often free. For instance, the National Foundation of Credit Counseling offers free consultation
“10 Surprisingly Easy Ways to Save Money While Renting.” Real Estate News & Insights | Realtor.com®, 31 Aug. 2022, www.realtor.com/advice/rent/ways-to-save-money-while-renting/.