Paying rent is a requirement for living, but that doesn’t make it any easier when it comes due every month. It can seem difficult to save money to buy a house, invest, or spend on your future when you’re renting an apartment.
However, with some planning and strategy, it’s possible to save and hit your financial goals while still renting.
Here are eight ways to save money while renting:
Like all financial goals, saving money while renting starts by creating a budget. Look at all your forms on income and calculate your monthly expenses. The simplest way to save money is to make sure your monthly expenses are less than your income.
To help with this, look for apartments and rental homes that fit within your budget and allow you to save money each month instead of spending it all on rent.
When you set a budget, you have a better idea of where your money comes from and where it is going. Being aware of your finances and making sure you stay in the green is the first step to saving money.
Make your savings harder to reach by creating a separate savings account. If the money you don’t spend each month is just left in your checking account or tied to a credit card, it’s easy to make an impulse buy and spend the money.
A separate savings account gives your savings a special place to sit where it is less likely to be touched. As a bonus, many savings accounts offer high interest rates, so you can watch your money grow instead of spending it.
Setting up automatic transfers to your savings account allows you to save money without having to think about it. You can decide how much money you want to move to savings every month and have it happen automatically so you don’t even see that money as available to spend in your checking account.
It may seem counterintuitive to pay down debt as you’re trying to save, but most forms of debt—especially credit card debt—have incredibly high interest rates that could negate anything you’re saving.
If you carry a balance on your credit card, you could be paying an interest rate of 15% a month, which adds up over time. Instead of worrying about increasing your savings account, start by paying off debt to avoid having to pay interest rates.
Start by paying down your highest interest debt and saving only a small amount before you jump into saving higher amounts each month.
As a bonus, having a better debt-to-income ratio will help you significantly when securing a loan to buy a house.
You have to pay rent, but living on your own means you have to cover the entire rent cost on your own. Getting a roommate or two can significantly lower your rent cost by dividing it between more people.
For most people, rent is their biggest monthly expense, so taking a big cut out of the cost can have a big impact on your savings goals.
Getting a roommate doesn’t mean you have to share the same bedroom. The cost of a two-bedroom apartment may be higher than a one-bedroom unit, but splitting the cost between two people lowers how much each person pays. Having a roommate can also help split the cost of other expenses like utilities, groceries, or other household goods.
Another way to save money while renting is to negotiate your lease. Some landlords offer discounts for returning tenants or if you pay your entire lease upfront. That could be a big chunk of money all at once but end up saving money in the long run.
You may also be able to get a discount if you sign an extended lease because it offers stability to the landlord and saves them from finding new tenants. Staying in one place also saves you from having to pay another application fee or security deposit.
Depending on the availability and demand in your area, you may be able to negotiate a lower rent cost or a smaller security deposit or pet fee. Talk to your property manager about not paying for a parking spot before you sign the lease, for example.
If you are unsure of your future plans and don’t want to waste money on a long-term rental agreement, ask to sign a month-to-month agreement. You’ll still pay rent every month, but if your plans change or you move, you won’t be stuck trying to get out of a longer lease, which can definitely save you money in the long run.
Rent tends to be more expensive in bigger cities. If possible, relocate to a more suburban area or a smaller city for lower rent costs. Paying less for a month’s rent, as well as lower costs for other living expenses, can make a big difference.
In today’s world, many people are working remotely, which could expand your options of where to live. Even if you work or go to school in a city, commuting from a less expensive part of town could lead to big savings.
The basic formula for saving money is to have your expenses be lower than your income. Aside from large monthly expenses like rent, you can also save money by cutting back on other costs.
Go through your credit card statement or monthly budget and think about what you can cut to save money. That could mean buying clothes secondhand or on sale to save money in your clothing budget, not eating out as much to save money on food, cutting cable or streaming services to save on entertainment, or working out a home instead of going to the gym.
You may even be paying for services and memberships without realizing it, so stay on top of your finances. Check your cell phone, internet, and insurance plans to see if there are less expensive options.
Cutting your expenses can require a lifestyle change, but it can also lead to huge savings in your budget that can add up over time.
If cutting expenses doesn’t leave you with the savings you want, consider adding a side hustle. There are countless ways to make money on the side, ranging from driving for rideshare services to delivering food and groceries, freelancing as a writer or website designer, or selling products or services online.
Consider your talents, schedule, and the needs of your area to find ways to make extra money. A side hustle doesn’t have to be a huge time commitment and may only lead to a little bit of money each month, but that small amount can be huge for your savings and lead to thousands of dollars over the course of a year.
Renting and saving can go together. Learning the best way to save money while paying rent can help you stay on top of your financial goals while still enjoying a good living situation. Take a look at your budget and find ways you can adjust your lifestyle to maximize your savings account.
Our team is here to help you find your next home. Feel free to call and schedule a showing or start your search right here.
