Kerry K. Taylor - 397 Ways to Save Money: Spend Smarter & Live Well on Less

Renting can make you rich. Thats the kind of statement that runs against almost everything our society tells us about property ownership, but its true. Under the right circumstances and with the right strategies, renting can be one of the thriftiest decisions you can makeand, because shelter expenses account for so much of our monthly budgets, it can be a big way to save. Most people would be surprised to know I built up a six-figure portfolio and paid off $17,000 in student debt while renting a modest basement suite in Vancouver, B.C. I had more than enough money for a down payment on a condo an hour outside of Vancouver, but I made the decision to continue renting to save more money. My reasons for renting were based on hard financial facts rather than emotion.

The cost of real estate where I lived was, and still is, astronomical when compared with the rest of Canada. At the time, a small condo far outside of the city was around $300,000, with condo fees ranging from $300 to $500 per month. With my rent being a mere $600 a month including heat, cable and laundry, the choice was clear: given my location within walking distance from work and my ultra-low rent, I could save thousands a year by not paying mortgage interest, condo fees, property tax and transportation costs. And thats just what I did: I lived in my rented apartment and squirrelled away savingsmuch more in savings, in fact, than I would have gained in home equity.

Many bankers, real estate agents and mortgage brokers would like you to believe home ownership is the best path to wealth. But renting can have huge advantages for those who pay low rent because they have either made housing sacrifices or live in a rent-controlled building. Renting also offers flexibility to those requiring a place for months or a few years. Its a lot easier and less expensive to give notice on an apartment than it is to sell a house.

If youre looking to rent a house or apartment, the Canada Mortgage and Housing Corporation (CMHC) suggests your monthly shelter costsincluding rent, electricity, heat, water and municipal servicesshould be less than 30% of your before-tax household income. This calculation does not include the costs of renters insurance, parking or amenities like cable, phone and Internet access. So before pounding the pavement looking for the perfect rental, add up your living costs and consider your level of income. It makes no financial sense to rent a place that leaves you with little savings at the end of the month.

If youve made the decision to be a renter rather than a homeowner, there are common ways you can save money on rent.

Rent less apartment. Renters have many housing options: high-rise and low-rise apartments, townhouses, condos, detached homes, basement suites and duplexes. As a general rule, units on upper-level floors cost more than units closer to the groundor under it! So steer clear of penthouses and opt for the ground level in buildings. Downsizing your apartment can also save you hundreds a month, because a smaller space costs less to rent. Renting a smaller space has the added benefits of reducing your energy costs and requiring fewer furnishings.

BOTTOM LINE: A modest rent reduction of even $100 per month saves you $1,200 a year. Multiply this by three years and youve saved $3,600, plus compound interest.