Editor’s note: This is a guest post, written by Ling Tran from finsavvypanda.com. This post was updated on 2/2/23
Are you stuck with debt and living paycheck to paycheck? Money seems tight for many of us and it’s hard to get by living comfortably these days, especially when you live in an expensive city like New York or San Francisco. Saving money and building wealth without sacrificing your lifestyle takes discipline, but these tips will teach you how to save money when rent is high.
5 tips for saving money when rent is high
1. Assess your lifestyle
Assessing your lifestyle is the first step to making real change. Prioritize the things that matter to you the most, such as travel, nights out with friends, having a large apartment, or living in a particular neighborhood. When you know what you care about and which expenses are needlessly sucking cash. Listing everything you spend money on and ranking your expenses is a good way to help you understand your preferences.
I used to go out for dinner and drinks with my coworkers three times a week for the sake of going. Surprisingly, this was a huge money sucker for me so I decided to cut back. As a result, I was able to save money for my vacation fund and investments. I didn’t feel any difference in my lifestyle because I prioritized what mattered the most based on my personal preference.
Here’s another example.
I have a friend who was able to cut his rent from $2,100/month to $1,500/month by moving to a smaller place without sacrificing the location he loves. He decided to downsize because he realized that he wasn’t using the space at his old place. Instead of paying for more space, he chose to bank the monthly savings of $400 into his investments and spent the remaining $200 on guilt-free spending.
Long story short, make a list of all your current spending and organize them from most important to least important. This will help you shift your spending to things that matter most to you while ditching the rest that don’t.
2. Create a budget
Most of us hate the idea of budgeting, but it really works. You’ll also find creating a budget that works for you easier after assessing your lifestyle. Consider every expense category and what matters most to you within it. Once you have a clear budget, stay focused and make it a part of your lifestyle.
But after learning about the financial guru, Gail Vaz-Oxlade, and her fail-proof budget strategies, my fiancé and I decided to give it a shot. After you assess your lifestyle in step 1, you won’t find it hard to create a budget that works for you.
By following Gail’s genius budget plan, we were able to go from almost $100,000 debt to over $750,000 in savings in just seven years! Believe it or not, the strategy itself is stupid simple. But for it to actually work, you need to stay focused and make it a part of your lifestyle.
As you create a budget that works for you – and that means going through each and every expense category – think about what makes you really happy and prioritize that.
3. Cut expenses that don’t matter to you
Instead of cutting small expenses that enhance your life, identify unnecessary costs and big monthly expenses. See where you can reduce these costs without sacrificing your quality of life. Focusing on the big wins yields greater returns! Here are some easy expenses worth cutting:
- ATM, bank, and overdraft fees
- Late fees
- Underused subscriptions
You might also negotiate lower prices for the following services without impacting your lifestyle:
- Cable, internet, and cell phone
- Car insurance
- Home insurance
- Credit card and student loan debts
Paying off your credit card and student loan debts or refinancing at lower interest rates can also help you save. The more you effortlessly cut from these expenses, the more you can save while renting in an expensive city.
I highly recommend reading How To Save $1,000 in a Month Challenge by Ramit, the New York Times Best Seller of I Will Teach You To Be Rich. He’s my #1 go-to person when it comes to optimizing your personal finances. His ultimate guide to saving money even provides you the written scripts to negotiate your bills!
As for credit card debt and student loans, you can save money by paying them off quickly and/or refinancing your debts with a lower interest rate.
The more you can effortlessly cut from these expenses, the more you can save when rent prices are high.
4. Negotiate your rent or consider moving
If you’ve built a good-standing relationship with your property manager, it never hurts to negotiate your rent. Property managers are often willing to keep high-quality tenants without raising the rent. Sometimes they’re even willing to discount your rent if you ask nicely. Finding a new renter takes time and money, so property owners will often bend over backward to encourage excellent renters to stay put.
As I mentioned earlier, you can also consider downsizing if you don’t feel the need for all that space. This may be harder for big families, but if you’re single or have a partner, this option will help you save money.
Here are some traits of an excellent tenant:
- Pays on time
- Keeps the place clean
- Treats the place as if it’s their own
- Never complains about the smallest things
- Never disrupts the place or the neighbors
Overall, the less a landlord needs to deal with any problems – in other words, the more passive they feel the rental property is – the more likely they are willing to give you a small discount.
5. Increase your income
A wise person once said “There is a limit to how much you can save. But there is no limit to how much money you can make.” If you’re renting in an expensive city and you feel strapped for cash, your best bet is to look for ways to make extra money that you can put into your savings. Consider ways you could make money in your spare time like:
- Flipping furniture
- Starting a money-making blog
- Earning side money and free gift cards from survey sites
- Mowing lawns
- Babysitting for kids in your neighborhood
- Taking a part-time job
Why is rent so expensive right now?
Several forces have pushed rental prices up. There’s a supply shortage, with friends and family members who lived together before the pandemic springing for their own places, either because they want to live more safely, need more space to work from home, or lockdowns placed pressure on their relationships. More than 80% of new household units formed since 2020 were single-person households. That’s placed a strain on the rental market, with more people wanting their own place than ever before. Many young families who dreamed of purchasing their own place decided to rent when they saw surging property prices.
With so many people looking for rentals, rental vacancy rates plummeted. When there are fewer vacant apartments property owners can increase their rents, as they know people can’t afford to be too picky. While current rent trends from Zumper show rental prices falling in the last few months, we’re still seeing rental prices much higher than they were before the pandemic. For example, in Tampa and Miami, rentals are costing more than twice as much as before 2020.
Final thoughts
It’s not easy to save money when you’re renting in an expensive city. But with a bit of effort and a change in mindset, anything is achievable. Despite the expensive costs of living, you can learn how to save money on rent and keep control of your finances.
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