You’ve likely heard of the so-called sharing economy. The theory goes that where in the past, in order to be able to use something, you mostly bought it, now you can just rent or borrow it. Personal finance experts often cite this as an easy and convenient way to cut back on costs. So now we have to decide when it makes sense to buy something, and when we can get along with renting or borrowing. Here’s our guide to help you.
Deciding whether to buy or rent your home is a big one — homes are usually the biggest purchase people make. To adequately make the call, it’s important to consider your personal finances, your location and lifestyle. Homeowners have pride of ownership and build equity, while renters have little or no maintenance costs and endure less risk. It’s important to crunch the numbers and figure out if renting or buying is the better move for you. Factors that go into it include your income, the impact on your taxes and the length of time you plan to stay put.
To determine if car ownership makes sense for you, consider how often you drive, how consistent your cash flow is, the availability of savings to cover a down payment and initial fees, how hard you are on cars, how long you plan on keeping the car and how flexible you need to be. You can use car-sharing and affordable rental services if you do not drive to work every day. You can also lease a car if you want to pay for only the use of car during the length of your lease. You can buy it if you plan to use it a lot and take good care of it.
With bike-sharing services popping up in cities all over the world, commuting or riding often can be possible without buying your own bike. If you want all the benefits of bike ownership without having to actually purchase one or having to store it, renting may be the right choice for you. But buying allows greater convenience and reliability, as it is not always possible to find a docking station with available bikes or spots when you need them. Think about how often you ride, how much you are willing to spend and if you have space for parking a bike before you sign up for sharing a bicycle, or purchase your own.
If you read a lot of books or watch a lot of television and movies, you should consider whether renting or buying entertainment sources is smarter for your finances and lifestyle. Do you like returning to what you have already seen or read to experience again? Do you like having options on hand when and where you need them? In that case, buying might be right for you. But if you have a subscription service or rental option available, you might find that the increased options and temporary access better for you. Plus, if you live close to a public library, you may not have to pay anything for temporary access to books, movies and magazines.
Buying a new dress or owning a tuxedo can be costly — and take up a lot of space in your closet. Luckily, there are rental companies that allow you to enjoy the outfit for an event and then return it and start shopping for all new options for the next occasion. This can help you cut serious costs for your wedding or another formal but infrequent affair, but may not be right for you if you have many events with a similar dress code or you want to keep it as an heirloom to pass down to your children.
While it may be nice to have a home of your own, a car or bike in the garage, movies and books on your shelves and plenty or options in your closet, it may also be more beneficial to own less and have more cash. It is purely personal preference, so consider the above comparisons and come to your own conclusions about whether you buying or renting is the better option for you.
More Money-Saving Reads: