Rent is one of the most significant expenses for most Canadians. With sky-high costs in large cities like Toronto and Vancouver, it can feel like rent eats up the majority of your paycheck.
Whether you’re searching for your first apartment or looking for ways to make your money stretch further, it’s important to learn how to budget and save money on rent. Here are five tips to help you manage apartment expenses and save money each month.
1. Create a Budget
The first and arguably most important step to saving money on rent is creating a solid budget to see exactly where your money is going. A budget helps you allocate funds toward essential expenses, like rent and utilities.
You can create a budget in several different ways, but most experts recommend following the 50/30/20 rule: 50% of your income goes to needs (e.g. rent, apartment expenses, bills), 30% goes to wants (e.g. eating out, subscriptions, shopping), and 20% goes to savings or paying down debt.
When it comes to rent, a general rule of thumb is to ensure it doesn’t exceed more than 30% of your monthly income. However, this number can even be stretched to 40% or 50% in today’s high rental market. To make rent more affordable, you need to be realistic about your expenses and cut back on non-essentials.
Start by listing all your monthly expenses, identify areas where you can cut back, and redirect those savings toward your rent fund. For example, if you spend $20 per month on a streaming subscription, reassess whether you really need it or if it can go toward your rent.
You might also want to consider using budgeting apps, which can help you categorize and track your spending in real-time.
2. Search for a Rental in the Winter Months
Timing is everything when it comes to finding decent rent prices. Believe it or not, the time of year you search for an apartment can significantly impact the price.
So, when are apartments cheapest? Experts say that winter, especially December and January, often sees lower demand, which means lower rent prices. Landlords can even sometimes offer discounts or incentives (like one month of free rent) to fill vacancies.
In contrast, the summer months tend to be the peak moving season, which means higher prices. If your lease is flexible, consider timing your apartment search during these off-peak months to get a better deal. If you play your cards right, you might even be able to negotiate rent with the landlord.
3. Widen Your Search Area
Living in the heart of the city is fun and convenient, but it’s often quite expensive. To save money on rent, consider expanding your search area to neighbourhoods outside the downtown core.
Look at neighbourhoods only a short commute away from the downtown area. In Toronto, neighbourhoods like Scarborough, Etobicoke, and North York generally have more affordable rent than downtown, yet they’re well-connected to the city via public transportation.
However, if you decide to live further out, you’ll need to consider transportation costs and your daily commute time. Is it worth living further out and having a longer commute to save some money on rent? Most of the time, it is, especially if you’re strategic about where you live.
4. Pay Upfront or Negotiate your Rent
Rent prices aren’t always set in stone. If you’re willing to negotiate, you might be able to snag yourself a better deal.
Do your research and check out other rental listings in your area to see what similar units are going for. If the apartment you want is slightly higher than others, you can use this as leverage to negotiate a lower rent price.
Another option is to pay a few months of your rent upfront. While this may not be feasible for everyone, landlords may be willing to lower the price slightly if you pay for a few months in advance.
Here are a few tips for negotiating your rent: be polite and professional, and highlight your strengths as a tenant (e.g., steady income, large savings, good credit).
5. Pay Rent with Your Credit Card
Here’s a tip you might not know – you can pay your rent with a credit card to save a bit of money every month. While most landlords don’t accept credit card payments directly, platforms like Chexy make it possible. You can pay your rent with a credit card and earn rewards points, cashback, or travel miles on what’s likely your biggest monthly expense.
For example, if your monthly rent is $2,000 and your credit card offers 4% cashback, you could earn $80 back each month. After fees, you’re still coming out with $540+ each year. That’s a significant amount compared to paying your rent via e-transfer or cheque!
However, to maximize these benefits, make sure to pay off your credit card balance in full each month to avoid interest charges. Additionally, choose a credit card that offers rewards exceeding any fees associated with using rent payment platforms.
Bonus Tips to Save on Rent
Here are a few bonus tips to help you save even more on your monthly rent payments:
- Consider Rent-to-Own Options: If you plan to stay in the same place for a long time, it might be worth looking into a rent-to-own agreement. This allows you to rent a property with the option to buy it later, often with a portion of your rent going toward the purchase price. This can be a great way to save money for an apartment while working towards home ownership.
- Check for Utility-Inclusive Rent: Look for rentals that include utilities (like heat and hot water) in the rent. Having this included can significantly reduce your monthly costs and make it easier to budget properly.
- Use Public Transportation: If you live further out, consider using public transportation or carpooling rather than getting a car. Public transportation can take longer, but it will save you money on gas, parking, and insurance, allowing you to put that money toward rent.
Renting doesn’t have to be a financial burden if you take the time to budget properly and explore ways to save money. With these tips and strategies, you can reduce costs and make rent more manageable.