Spending money on things you rarely use is a common budget mistake. You could potentially save thousands of dollars per year simply by analyzing your lifestyle, your needs and how often you use certain items – cars, tools, sports equipment and so on – and deciding whether it’s worth buying them. In many cases, renting might be the better choice.
When trying to decide between renting or buying an item, there are multiple factors to consider besides its actual price. For example, a car costs you a lot more than its initial price tag – you will be paying insurance, maintenance, parking and so on. Here are some of the most frequent items, products and services that you might be better off renting than buying:
People living in large, busy cities, with good public transportation networks, are usually better off renting a car than purchasing one. If your commute takes about the same time by car as it does by public transportation, the hassle of owning a car in a big city is really not worth it. Just think about the stress of finding a parking spot on the street or having to pay extra money for apartments and homes that include parking space.
When pondering whether to purchase a car a not, put all the costs on paper. The best-selling passenger car in the US at the moment is the Toyota Camry, with an initial price tag between $25,000 and $30,000. You also need to add insurance and maintenance costs to that.
Car maintenance, repairs and tire costs add up to 8.94 cents per mile, or $1,341 per year based on driving 15,000 miles annually, according to the American Automobile Association. The average full coverage auto insurance is almost $1,200 per year, as per the same source.
Parking costs vary a lot, depending on where you reside. However, if you live in a large metro, those costs will be quite significant. For example, in New York City, the average monthly parking costs are $655, according to Parkopedia’s 2019 North America Parking Index.
Keep in mind that, if you need a car for your weekly shopping trip or for getting out of the city once in a while, there are plenty of services where you can rent one on the spot. Apps like Turo or Getaround let you rent a Toyota Camry or another vehicle of similar capacity for about $52 per day.
Sticking to our example, owning a Toyota Camry in NYC will call for about $16,400 annually, with all the costs – annual lease, maintenance, insurance and parking – included. If you rent the same car for one day per week, every week of the year, it will cost you around $2,700 annually.
Only after putting all these costs in balance with the advantages of owning a car can you make an informed decision.
2. Your Home
Although popular wisdom says it’s better to purchase a home as soon as you can afford to, instead of wasting your money on rent, the reality is a bit more complex. In certain situations, it is in fact less expensive to rent, even in the long term.
The costs associated with purchasing and owning a home are pretty high. There are one-time costs, such as the mortgage fee charged by the lenders for processing a loan, closing costs like escrow fees and property taxes, and also the realtor fees.
Then there are the ongoing costs: homeowner’s insurance, the interest you pay on the mortgage, local taxes, maintenance and the cost of repairs. You should also factor in the fact that your money is tied up in the home, so you are foregoing other investment opportunities that could be more profitable. The New York Times created this useful rent vs. buy calculator for homes that could help you make a decision.
Buying a home also ties you to one place. You are less likely to search for or accept job opportunities in other areas of the country, because selling or renting out your home takes time and effort. In the long term, this might cost you a pretty penny too in lost wages.
Available storage space is an essential feature when shopping around for a home to buy. We all need plenty of storage space to keep our stuff out of the living space and to maintain a tidy, nice looking home. However, purchasing or renting a home larger than you actually need, just to have enough space for furniture, clothes, books and other items is definitely a waste of money.
Instead, simply rent a self-storage unit located as close as possible to your home and use it to store stuff you’re not using every day, such as seasonal items, winter decorations, children toys and clothes, and so on.
4. Power tools
Power tools can help you finish your DIY projects in no time, but they’re pretty expensive, heavy and bulky. You might need a heavy-duty power washer, a drill, a chainsaw or a sander to maintain and repair stuff around your house and yard, but it’s just not worth buying them for a one-time job.
Fortunately, home improvement stores like Home Depot or Lowes rent professional quality power tools you can use when the need arises. Many local hardware stores also have this type of service, or you could check online ads for tool renting in your area. Smaller businesses or even individual people who own power tools oftentimes rent them out.
5. Sports equipment
Sports equipment doesn’t come cheap. You should buy your own only if you’re really into that sport and you’re positive that you’ll be using the equipment often. If you’re skiing one or two times per season, or biking a few times each summer, you’re better off renting the equipment that you need.
Renting sports equipment also allows you to try out different sports without spending too much money, and then you can decide which one you enjoy the most and maybe buy some equipment for it.
6. Books and textbooks
Avid readers know how expensive books can be, especially if you want to keep tabs on newly published books and to read them as soon as possible. However, libraries get new book releases shortly after publication, so you don’t have to wait too long before reading them. And it’s not just books: libraries also offer access to magazines, audiobooks, DVDs, BluRays, video games and digital downloads. And the only costs involved with borrowing materials from a library are the potential late fees that occur if you forget to return them on time.
Textbooks for college students can also be extremely expensive. According to curriculum vendor Applied Educational Systems, a college student’s average annual costs for textbooks hovers around $1,100 per year. Fortunately, there are many places where you can rent college textbooks – Amazon, for example, has textbook rental services.
7. Party decorations and clothing
Planning a themed party? You should start by finding a business that rents party decorations and accessories, because it certainly doesn’t pay to buy a bunch of stuff you’ll literally be using only once.
The same goes for children’s costumes for those parties, or for Halloween. A well-made costume can be pricy, and the chances that your kid will wear it again are minuscule, so it makes a lot of sense to rent one.
It’s easy to give in to impulses and purchase items you think you need. For this reason, consider all factors when making an acquisition, big or small, and determine if it really is a necessary one or if renting might be a better option.