For most people, housing is their biggest expense. While rent costs vary by region, you will almost always save money by living with others or living at home. According to the U.S. Housing Department and several other sources, Americans spend around 25-30% of their income on rent. With housing comprising such a high percentage of income, finding a way to cut back on housing costs should be one of the first ways that you look into saving money. While some people value a nice-looking or conveniently-located place or would rather live alone than deal with roommates or living at home, I personally would rather cutback on lodging in any way that I could (while I’m young and single) so that I could use that money for other things that I enjoy. And though living at home isn’t feasible for some who have moved away from their hometown, the savings do wonders for your bank account (even if putting up with relatives doesn’t sound that appealing — for some, no amount of savings could get them to live at home!).
When I first moved down to North Carolina and was researching places to live, I toyed around with the idea of renting a one-bedroom place for myself. I had arranged meetings with several potential roommates (from yes, Craigslist; I was new to the area and didn’t know anyone at all) and really liked a couple of them, but the one-bedroom place was absolutely gorgeous and within walking distance to my new job. However, it had a hefty price tag at $900 a month excluding utilities and it was unfurnished. Both of the places that I looked at with roommates were further away and were nice but not as beautiful as the other place, but were $400 per month including utilities. Estimating an extra $100 for utilities if I were to live by myself, that was a decision of $1000/month or $400/month. For a savings of $7200 a year, it was a no-brainer. Plus, because I was new to the area, I thought that having roommates would actually be a better choice, since they could potentially show me around and provide me with some companionship. I’m so grateful that I made that decision two years ago. Not only did I save $14,400 in two years (looking back on it, there’s no way that I could have afforded the one-bedroom place unless I completely removed any fun activities and travel from my life), I made several amazing friends (along with some cat companions that one of my roommates had!). Granted, I probably could have found other one-bedroom options cheaper than the $900/month apartment — that was just one place that I happened to stumble upon when I was visiting the area. None of my other options would have beaten $400 a month though. Even a savings of $100 a month on rent adds up to an extra $1200 per year. Another way that I cut down on housing expenses was by taking the smallest of the rooms, since the cost of the rooms in our 3-bedroom townhouse are pro-rated. The size difference of the room wasn’t substantial and I was able to save $300 per year, or $600 in total since I’ve been living down here. Again, it doesn’t sound like much, but those savings are more than enough to buy a ticket to somewhere within the U.S. or pay for a hotel and gas for a couple weekend getaways nearby!