Get a Roommate

As renters face escalating housing costs, you should be concerned that it’s getting harder for them to save for a home purchase. Is there anything you can tell them to do to help their chances of being financially prepared to transition to home ownership? Actually, there is — and it’s pretty basic advice: Get a roommate.

Renters could potentially save anywhere between $25,000 and $100,000 over the long haul by sharing space with a roomie. Savings like that can help them break into ownership much faster. A record-high 11 million renters are spending at least half of their incomes on housing — an amount financial experts say is too much — and an additional 21 million are paying 30 percent or more, according to the annual State of the Nation’s Housing Report from Harvard University’s Joint Center for Housing Studies.

But a renter who lives with a roommate in a two-bedroom apartment and splits the rent 50-50 could potentially save an average of $420.70 a month versus a renter who lives in a one-bedroom apartment alone, according to financial website SmartAsset.com. In just five years, that could amount to a savings of $25,242. In high-priced markets, the savings could be more than double.

Source: MarketWatch