Young adults paying off student loans or saving for their first home won’t soon reach their financial goals just by cutting out Starbucks or canceling their gym membership. A faster way to save money is to trim housing expenses.
Here are four ways to save on housing and free up money to pay off debt, save for a down payment or fund other life events.
Live with your parents
It may not be as fun as living with friends, but you’re not alone if you live with Mom and Dad. A third of adults ages 18 to 34 lived with parents in 2015, according to the U.S. Census Bureau.
The savings can be significant. The median monthly gross rent in the U.S. in 2017 was $1,012, according to the Census. Assuming you can live at home and save that amount each month, you could save more than $24,000 in two years.
Sit down with your parents to see how much they expect you to contribute. For example, paying reduced rent and a portion of the monthly bills may be a fair deal. It’s also an opportunity to create a budget and establish some financial independence.
Head to the burbs
If living at home isn’t an option — or if it’s driving you crazy — sacrifice living in the most desirable areas, where rent is typically the highest.
Scott Trench shared a two-bedroom apartment outside of Denver in 2013. The monthly rent of $550 — almost half what he would have paid in the city with a roommate — helped Trench save enough to buy his first house in 2014.
“If you want to have fun, you can spend an extra $50 a week” to get downtown, says Trench, 28, president of BiggerPockets, a real estate education company.
Living in the suburbs works best in cities with access to cheap public transportation, especially if you work downtown. Compare housing options using resources like Trulia, Zillow and Craigslist, factoring in rental plus transportation costs.
Negotiate your rent
If you’re a model tenant and your lease is coming up for renewal, ask your landlord for a better deal. If you don’t plan to move, you could request a longer lease in exchange for lower rent.
Consider the value you bring to negotiations, too. If you’re handy and your landlord allows it, offer to do small jobs around the property such as painting or repairs in exchange for discounted rent. You might also get a break by sending referrals to your landlord’s other properties, or by negotiating a free parking space or extra storage.
Gain negotiating confidence by coming prepared: Research rents of comparable places in your area before you approach your landlord.
Rent out your place
As you prepare for homeownership, you can plan to keep saving by ”house hacking” — buying a house and renting out the spare bedrooms, earning enough to cover your housing expenses.
Trench purchased a duplex and rented out a spare bedroom in his unit for $550 a month. He rented out the other unit for $1,150. When factoring in all monthly expenses, his housing costs were often zero, he says.
House hacking comes with risks like damage to your property. Carefully screen tenants using credit checks, background checks and references to reduce those risks, Trench says.
Be sure to study rental laws, and consult with a tax professional for advice on reporting rental income on your taxes.