There are plenty of money-saving tips online, from getting roommates and subletting, to minimizing your electricity and water consumption. But what if these small steps are simply not cutting it?
Then you need to review the larger picture and implement a few strategies that’ll make your finances more sustainable as a long-term renter.
Understand Your Expenses
Besides rent and utilities, rentals might charge pet fees, various deposits, bonus amenities, etc. Research what they entail and know your rights before you commit to a lease.
Some states, like California, make it illegal for a security deposit to be non-refundable, but your landlord won’t necessarily tell you that. Application and tenant screening fees typically are non-refundable but might be subject to limitations. Washington landlords, for example, mustn’t charge you more than what the background checks and credit checks cost them.
Pet deposits vary between landlords, and depend on the number, species, breeds, size, or weight of pets. Some implement an additional monthly fee. Large apartment complexes often feature pools, gyms, and outdoor amenities. These can save you money on off-site memberships, but if you don’t use them regularly, opt out to avoid unnecessary expenses.
Get Appropriate Insurance
Renters insurance is meant to grant you a wide scope of protection at a relatively low cost, but don’t go into it unprepared. First, brush up on how renters insurance works, then shop around.
You might want a different institution than your life insurance provider. The best policies will cover all three types of renters insurance so you avoid the stacking costs of separate payments.
- Insure your belongings – If something is stolen from your apartment, or damaged in a policy-covered incident, renters insurance should help you replace or repair those items.
- Insure the rental itself – If there’s a fire, flooding, or other event that makes your space uninhabitable, insurance should (at least partially) fund your living expenses until the situation is resolved.
- Insure yourself as the person responsible for the apartment – If anyone is injured in your home and sues you for damages, you should have renters liability coverage to protect you.
Be Able to Walk Away
One of the key points that comes up when comparing renting versus homeownership is flexibility. Once you buy a house, you’re bound to the property, whereas you can always leave a rental if the conditions take a turn you don’t like.
Tenants typically relocate due to changes in the community or rent increases. While you can’t influence what kinds of people move in and out of your complex, you can plan your finances in the long term.
The key strategy here is building solid savings. People often stay in unfavorable conditions because they simply don’t have the money to fund new application fees and new security deposits while still paying rent and utilities in their current residence.
Many landlords enforce regular rent increases (e.g. annually) and you have to be able to keep up with them – as well as have a safety net for when they start demanding too much.
Downsize Instead of Storing
One key factor in the cost of apartment rentals is their size: the larger the space, the higher the rent. That’s why many people downsize, but shoving everything into a storage unit is a long-term fiscal nightmare.
Off-site storage costs will significantly dent your monthly or annual budget, and even if you transport things yourself, you’re still spending gas and time. On-site storage, like a basement in an apartment complex, often adds to your total rent, plus you have to fight problems like humidity or pests.
Instead, consider your lifestyle right now, what items you use regularly, and how much space they take up. Get rid of anything else. Sell, donate, or recycle furniture, clothes, and consumables. Digitize your photos, letters, etc., and give any sentimental pieces to a relative or pass them on to someone younger. That way you can still enjoy them without wasting space and having more dust to wipe.
You May Like to Read: Renting vs Buying: Making Informed Real Estate Decisions
Don’t be a Late Payer
No matter how long you stay in a given apartment, pay your rent and utilities on time every month. Timely payments massively impact your credibility down the line. If you often pay late, it negatively affects your credit report, which comes back to bite you when you decide to move apartments or want to try taking out a loan.
Staying on top of your financial obligations also saves you money. Utility companies often charge late fees on overdue bills, and these can stack up to a pretty high number pretty quickly.
A landlord might also impose some penalty if you’re consistently late with rent, especially if your apartment is managed by a company instead of directly by the owner. At the very least, you might be seen as an unreliable tenant, so they might refuse to renew your lease.
All in all, finance optimization as a renter is a matter of planning. Downsize before you move, and resist the allure of rented storage units. Before you sign a lease, understand the fine print of what you’re paying for, and get a versatile renter’s insurance policy.
Once you commit to a rental, make your payments on time, and make sure to build savings so you have the freedom to up and leave at any point if you decide it’s time for a better place.
By Mike Johnston