FinTalk: Renting vs. Buying
To rent or to buy? That is the question!
Housing will never go out of style. No matter what your living situation might be, you’ll always need a home. By that, I don’t mean the romanticized idea of “home is a person” that’s been circulating social media for FAR TOO LONG! I am talking about actual homes, with walls, and a heating system.
Other than the affordability dilemma, there are a few things to go over before deciding whether you should buy or rent a house, the pros and cons of renting or buying a house. Let’s nitpick this list and see what’s best for you!
Whether you’re gonna buy eventually or even rent, you must be living somewhere now. If you own a house already and planning on buying another one. I’d say you’re not in a hurry to make such a purchase. However, if you’re renting, then you need to look at the numbers.
- Track your spending
Use apps to track your spending, and see where you can make cuts and saves. If you have a low income or if your salary hasn’t changed with inflation, you’re gonna need to review your budget all over again. Pre-inflation budget can’t be the same as a post-inflation budget. Ask yourself, if you’re paying X amount on rent right now, where can you make cuts to save for a new home?
2. Is it necessary?
Having a home is necessary, no question about it. But where does it lie in your priorities? If you already own a home, it’s not gonna beat something like paying your debt! But if you’re renting, where are you prioritizing buying a house in relation to other savings? Between an emergency fund, travelling savings, retirement plan, and debt. How high is it on your list? Wherever it is, you need to set up your finances around it within reason.
- Set realistic goals
Goals should be aspirational, but at the same time, they should also be realistic if you want to achieve them. Set a home goal that includes the amount you can afford to save in a realistic time frame based on your buying plan. Are you saving for a downpayment on a house? Planning to mortgage? Pay full in cash?! What’s your deal? Whatever the amount, you will not save it overnight. So look at your finances and see how much can you put aside in that time frame.
4. Minimize your rent
Renters don’t have any control over how much they pay for rent. They do have control over where to live. Most people think that renting is just like burning money. And while it doesn’t give you any equity, it does give you a home! Rent means you can live anywhere and you can still choose a decent place to minimize rent in relation to your income. There’s so much more you can spend your money on instead of rent. So choose wisely and choose what fits your budget not what fits societal views!
So, what’s the final verdict? Whether you decide to rent or buy, the key is to make an informed decision that aligns with your financial situation and life goals. Renting can be flexible and less of a commitment while buying can be an investment in your future. Remember, the best choice is the one that works for you and your circumstances.