How Renters Secure Their Financial Future
Renters can improve their finances by growing their credit score and contributing to retirement accounts, among other strategies.
NEW YORK — Renting an apartment or a home is convenient for people just starting out in life who may not have ample savings or a high enough credit score to secure a mortgage. Renting also may be necessary for individuals who have been priced out of a real estate market that has remained high over the last several years.
Though conventional wisdom may suggest renting is a poor long-term investment, there are certain benefits to renting. In addition, renters can look to various strategies to solidify their financial futures.
Grow your credit score. Renters can ask a landlord to use a resource like Experian's RentBureau to report their payment timeliness. A positive rental history that is reported can help renters improve their credit scores. A landlord needs to be signed up with a rental payment service that works with Experian for this data to be posted. In addition to this, renters should make sure to pay off credit card balances in full each month and make loan payments on time, which can positively affect their credit rating.
Build an emergency fund. Establish a fund that contains at least three to six months' worth of living expenses to provide a safety net in case of unexpected events. This may help renters avoid debt that can take years to pay off.
Contribute to a retirement account. Put a portion of money toward a 401(k) or an IRA even if you are renting. Find out if your employer will match contributions. Retirement accounts with sizable balances can provide a safety net whether you rent or own your home.
Stay apprised of local real estate trends. Monitor current market conditions and use that knowledge to negotiate lower lease payments if the market suggests you're overpaying. If a landlord is unwilling to negotiate, consider moving at the end of your current lease.
Renters can take steps to secure their financial futures.
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