1. Take advantage of work-from-home policies

At the onset of the pandemic, rent in expensive cities like New York and Seattle plummeted. But when inflation really started to soar, prices not only rebounded, but are now up significantly all across the country.

But some pockets are still affordable. If you’re working remotely permanently, why not look into your options beyond the major metropolitans to set up shop? According to analysis from Rent.com, some of the most affordable cities in the country include: Springfield, MO; Wichita, KS; Lubbock, Tex. and Toledo, OH.

Some places will even pay you to move there.

As a renter, you’re much freer than a homeowner would be to pick up and relocate somewhere more affordable. Plus, in mid-size markets and smaller towns, you’re likely to get lots more space for the same or less dollar value.

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2. Find better investments than homeownership

Many people assume that owning a home is a good investment, but that's not necessarily true.

A 2010 Federal Reserve report titled "American Dream or American Obsession?" showed that the actual rate of return on U.S. real estate between 1975 and 2009 was below 0%.

Meanwhile, the stock market's average annual return between 1975 and 2009 was 3.375%, after taxes and inflation, according to the Fed study.

Today, it's never been easier to put money into the market — between investing apps and all the alternative ways to invest in real estate, you have some great options to grow your money.

3. Use the money you save to pay down debt

Owning a home involves a number of non-recoupable costs like mortgage insurance, homeowners insurance, interest and property taxes. And when something breaks down, you’ve got to fix it yourself instead of simply calling the landlord.

When you’re able to save money as a renter, you could take it and put it toward reducing your debt load.

Read more: ‘The numbers just don’t work’: While rising mortgage rates have some homebuyers giving up, others think they’ve found a workaround

If you’ve been leaning on your credit card to help keep up with soaring inflation, you might be doing your future self a disservice.

Credit cards have notoriously high interest rates. And once that interest starts compounding, a $500 couch could cost you way more in the long run. Because of that, financial advisers would always encourage you to prioritize paying down your balance.

And it doesn’t hurt that clearing your debt should help improve your credit score, which will make it easier for you to get a mortgage down the line if you do decide to become a homeowner.

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4. Invest in yourself

It's never a bad idea to upgrade your marketable skills by going back to school.

Getting a master’s degree or even just going back to finish your undergrad in a high-paying new field might be all you need to move yourself into a new tax bracket.

A study out of Kansas State University compared the financial situations of three different categories of students: those who dropped out and never went back to school, those who went back to college but didn’t finish their degrees and those who went back and earned their degrees.

The results showed that consumers who return to school and earn degrees tend to earn more. Immediately after graduation, students can expect to earn an average $4,294 more. And their average yearly wage growth was generally increased by another $1,121.

If that sounds appealing, some of the most profitable roles right now according to Monster.com include nurse anesthesia, telecommunications engineering, financial analysts, electrical engineering and computer engineering.

5. Ditch your car

Today’s steep gas prices are one of the major drivers of the country’s record-setting inflation rate, which means cutting back on driving — or cutting it out entirely — could save you tons.

If you’re renting in a major urban center, pick a place in a neighborhood that’s walkable and has access to public transit. Cutting out gas, an auto loan or lease, car insurance and all those expensive repairs could save you hundreds of dollars a month.

Of course, if you can’t live without a vehicle, you might consider dropping down to one car for your entire household.

What are your spending habits?

When you know where your money is going, you can make better financial decisions.

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About the Author

Sigrid Forberg

Sigrid Forberg

Associate Editor

Sigrid’s current role is associate editor, and she has also worked as a reporter and staff writer on the MoneyWise team.

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The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.