Many people spend more money on housing than any other recurring expense. So when the cost of putting a roof over your head increases, it can wreak havoc on your finances.
The tough thing about renting a home versus owning one is that you never know when your landlord might opt to raise your rent. And since the cost of moving to a new rental could be exorbitant, you might get stuck paying that higher sum when a rent increase comes through.
The good news, though, is that a rent increase doesn't have to wreck your finances and stop you from meeting your savings goals, whether it's building an emergency fund, socking away a down payment on a place of your own, or amassing wealth for retirement. Here's how to keep up with your long-term goals even as your rent climbs.
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1. Be mindful of your nonessential spending
There's absolutely nothing wrong with spending money on things that make your life more enjoyable, whether it's coffee from the shop around the corner or streaming services that help you unwind at night. But when an essential expense like rent goes up, you may have to cut back on some of those other expenses to keep up with your savings goals.
Take a look at your recent bank or credit card statements and add up your monthly nonessential spending. Then, prioritize that spending going forward so you're able to cover your rent without cutting back on savings. If you typically spend $300 a month on nonessentials and your rent is rising by $80, you'll have to cut your "fun spending" to $220.
2. Get a side hustle
When you work full-time, taking on a second job isn't always easy. But if you're able to put in some extra hours, you might manage to give your income enough of a boost to cover your rent increase.
That way, you can keep spending money on the things you love and also keep working toward important goals. In fact, you may be able to increase your retirement plan or savings contributions with your side hustle income on top of covering higher rent payments.
3. Try negotiating
Landlords have rising expenses they need to keep up with. So when they raise rents, they don't necessarily do so in order to be greedy. Often, they'll raise rents so that they can keep up with their own expenses, like property tax hikes.
If you're looking at a rent increase, you may not be able to whittle it down to no increase at all. But you can try negotiating with your landlord to minimize that increase.
Going back to our example, if your rent is rising by $80 a month, try negotiating that number down to $40 by reminding your landlord that you've always paid on time and are a quiet tenant who's never had any complaints. If you're a good tenant, your landlord might work with you to avoid losing you.
A rent increase is never fun, but often, it's an inevitable part of being a tenant. Take these steps to help ensure that higher rent payments don't get in the way of meeting the goals you've set for yourself.
