Six tips for building savings while renting
It is a common misconception that owning a home is better than renting. In reality, renting is a more affordable and convenient option for many people. Renting is also more predictable than owning — no closing costs, interest rates, property taxes, etc. — which makes it easier to plan your finances and budget. Here are six tips for helping you build on your savings while renting.
Improve or build your credit score.
More companies than you might think rely on information like a credit score when making a decision on whether or not to do business with you. From utility companies to insurance to cell phones, your credit score helps organizations make decisions about their rates and security deposits. While you’re renting, take the time to examine and improve your credit or start building it. While this seems like a daunting task, there are simple steps you can take to help make improvements. Making sure your bills are paid on time is a great way to improve and start building your credit. The more you pay on time, the better your score will be. Everything from your MLGW bills to internet and cell phones can impact your credit. Memphis Housing Authority also has a credit program to help you with the process. Through our Family Self-Sufficiency Program, we can assist you with financial planning and budgeting, case management or coaching and personal goal development.
Build a budget.
A great way to build your savings is to build a budget. To start, you should sit down and determine where your money is spent. There are some expenses that come around every month that need to be paid — rent, utilities, phones, etc. When looking at how much money you bring home with your paycheck, you’ll be able to see how much of it is already accounted for with those bills. When it comes to budgeting, it’s also important to be a conscious spender. Two easy ways to do this are by trying to spend less each month than you earn and stopping to think about a purchase before you go through with it.
When it comes to budgeting, you should also avoid check-cashing businesses. While they do give you the amount of the check up-ont, they will charge you the full amount of money plus a high amount of interest if you don’t pay them back within their specified time frame. The interest can sometimes be so high that it’s nearly impossible to pay it back. This can cause someone to start accumulating debt that is near impossible to get out of.
Start a savings account.
After building your budget, you can start to think about saving. At its base level, savings is the amount of money you have left after taking out all of the necessary money you have to spend — food, bills, rent, etc. Some months might use all of your paycheck, but even small increments of money can have a large impact if you open a savings account. Savings accounts are special accounts that you can open at a local bank or through an online banking platform. They’re not meant to be used like your checking account, but they’re instead a place to store money for longer amounts of time. Because they’re meant to sit in the bank, you earn interest while your money is in the account. Interest rates vary, but you can sometimes earn 1-2% a year on the money in your account. So if you have $100 in your savings account, you could earn $1-2 depending on your interest rate. That might not sound like much, but it can add up over time.
Look into credit unions.
Banks are a great way to handle your funds, but they aren’t the only option. Credit unions are just as reliable and trustworthy with one major difference. While banks are typical for-profit organizations, credit unions are not. This means that credit unions are not trying to make a profit based on the individuals who use their services. There are several benefits for credit union members from lower fees and borrowing rates to educational resources. There are a number of credit unions in Memphis that are great options for our residents looking to open bank accounts.
Reduce your energy spend.
While some monthly expenses are easy to predict, your utility bills can fluctuate from month to month. Reducing your energy costs is a great way to keep your bill low and more manageable. Some easy tips to help you are setting your thermostat temperatures higher in the summer and lower in the winter. You can also reduce your water usage by cutting down on the time you spend in the shower to only running a washing machine or dishwasher when it’s completely full. In Memphis, MLGW has payment plans that people can enroll in. For those with fixed incomes, MLGW has an option for fixed monthly payments. They also have options for people who might need extended payment times, which helps individuals repay past due balances while still keeping up with normal payments. Learn about some of their options here.
No matter if you own a home or rent, there are easy steps you can take to start building up your savings. Memphis Housing Authority is here to assist you in any way that we can.