09/07/2024
$333,065
According to a recent study, the average American will spend a staggering $333,065 on rent and related expenses before finally becoming a homeowner!
The Shocking Lifetime Cost of Renting and 4 Tips to Turn the Tables
If you’re a renter—or planning to become one in the near future—you’ve probably noticed that rents are high. That’s no surprise, especially with housing markets booming and the cost of living rising.
For many people, renting often feels more affordable than buying a place of their own, even if it comes with the sting of watching a significant chunk of their paycheck disappear every month.
But here’s a question: Have you ever paused to consider just how much you’ll pay in rent in your lifetime?
It’s probably not something you want to think about, but understanding the bigger picture of your rental expenses could be a game-changer, potentially saving you both time and money in the long run.
The Average Lifetime Cost of Renting
According to a study done by Self Financial, the average American will spend a staggering $333,065 on rent and related expenses over their lifetime. That’s roughly $25,620 per year from age 22 to 35. This figure includes about $241,303 in rent payments alone, with another $68,074 spent on utilities, and $12,145 on moving costs.
Of course, these numbers can vary widely depending on where you live. For example, if you’re renting in Hawaii, you could be looking at a lifetime rental cost of $599,242, or $46,096 per year, which is the highest in the U.S.
But it’s not just about geography. The study factored in that renters often move every couple of years, don’t recover about 25% of their security deposits, and spend a considerable amount on furnishings — some of which might be unnecessary or extravagant.
4 Tips for Keeping Your Average Lifetime Rent Costs Down
Now, before you start panicking at the thought of handing over a small fortune to a landlord over the years, let’s talk strategy. Here are 4 ways to minimize how much you spend on rent in your lifetime:
Live at home with family for as long as possible. While not everyone has the luxury of living at home with their family between the years that they are 22 to 35-years old, many do, but just choose to rent a place because they want their freedom and autonomy.
The reality is, a lot of young adults also find themselves eventually moving back home to live with family anyway, due to financial reasons. The good news is, according to a recent survey, 85% of parents are thrilled to have their adult kids move back home!
So, consider just living with your family for as long as possible, and make an effort to save money until you can afford to buy a place of your own, and avoid renting altogether.
Don’t move as often. The study revealed that the average renter moves every 27.5 months, and it costs them over $12,000 each time. If you absolutely have to rent a place, try to avoid moving every couple of years, and that can add up to significant savings.
Don’t damage your rental. The study referenced that 26% of renters surveyed claimed to have lost their security deposit at least once, and estimated that renters likely lose 25% of their security deposits over the course of time they rent.
Landlords can’t just keep your security deposit for no good reason, or even normal wear and tear, but they can certainly keep some of your deposit if you damage their property. If you give your landlord no reason to keep your deposit, this can add to your net savings over time.
Furnish frugally. Another area where renters tend to overspend is on furniture. The allure of furnishing your space with stylish, new items can be hard to resist, but it’s not always necessary. Consider using hand-me-downs, buying second-hand, or opting for more affordable, yet durable, furniture pieces that you can eventually take with you when you do buy a home. Remember, every dollar you save on furniture is a dollar you can put toward future homeownership.
Become the landlord. Look into buying either a multi-unit house, or a single-family house with enough space you can share with roommates, and charge them rent. Doing this will not only help you save money on housing costs, it could actually make you money every month.
Renting a place to live for at least some period of time in life is unavoidable for many people, and some people spend their entire life renting. There’s absolutely nothing wrong with renting. But if you want to buy a home in the future, every year you spend renting nips away at the money you could be saving toward a down payment.
Hopefully just being aware of how much money gets spent on rent by the average person will give you enough motivation to put some of these tips into action, and cut down on how much you spend on rent, no matter how long you’re a renter!
The Takeaway:
Renting can drain a significant chunk of your paycheck over your lifetime, with the average American spending over $333,000 on rent and related expenses.
To cut down on these costs, consider staying with family longer, or at least minimizing the number of moves you make, avoiding damage to your rental, and furnishing frugally, if you do rent.
Or, turn the equation around entirely and become a landlord! Buying a multi-unit house, or a single-family home with extra space you can rent out, could not only save you from spending hundreds of thousands on rent in your lifetime, it could make you money instead.
