Whether you are a first-time or established renter, it’s important for you to make financial decisions that will help you achieve your future goals — whatever they may be. Here, we’ve collected tips to help renters budget, save and grow their credit.
Create a budget that aligns with your goals.
As a renter, maintaining a thoughtfully planned budget will allow you to understand your expenses, develop positive money management habits and lay the groundwork for you to achieve your long-term financial goals. To start, you may want to consider the factors that determine how much rent you can afford. But once you are comfortably settled in your rental, there are additional tips you can use to spend less and save more.
- Compare your rent to your income: As a general rule, you should aim to keep your rent below 30% of your net monthly income (income after taxes are taken out).
- Consider the costs of renting: Your monthly housing payment may be the largest cost to rent, but it’s not the only one. For a full picture of your expenses, you’ll need to take upfront and recurring rent costs into consideration
- Look to lower utility costs: Renting an energy-efficient apartment can help you save a significant amount of money on your monthly utilities. In addition, consider cancelling any unused subscriptions for an additional cost savings.
- Pay yourself first: Whatever your financial goals, you may consider setting up an automated payment amount to go directly from your paycheck into your savings each month, also known as the “pay yourself first” method. This strategy ensures you are saving consistently and can keep you on track to meet your long-term goals.
Take advantage of credit building opportunities.
Your credit score matters when you apply for a lease. But it also plays a part in your ability to qualify for financing on mortgages, car loans or even higher education costs. If you don’t know your credit score, start by checking it for free to get an idea of where you stand. Whether your score is high, low or you’re working to establish one, you can take actions that positively impact your credit. Paying your credit card bills on time and in full each month is a great habit to establish excellent credit.
A recent Freddie Mac initiative allows you to grow your credit score when you make on-time rent payments. Since 2021, although credit scores are affected by a number of factors, renters participating in this rent reporting initiative have been able to improve their credit scores. Check with your property manager to see if they automatically report rent payments to the three major credit bureaus. If they don’t already, ask if they are willing to report your payments. If not, you can report them independently by signing up for a rent reporting service.