by Scott Jensen, Financial Planning Consultant with COUNTRY Financial
“Renting is just throwing money away. You should always buy instead.” Who hasn’t heard similar statements? It seems like sound advice, but is it really?
It’s kind of like asking the question, “How long is a rope?” The answer, of course, is “it depends.” Like many things in life the truth is largely a function of circumstances and goals. While a recent survey by COUNTRY Financial found that 63% of Americans who own their own home feel financially secure compared to 39% of renters, the survey results also show that there is an enormous grey area that exists between the two options.
Our conclusion is influenced by our benchmark for determining success. Are we evaluating the options based on the lifestyle differences or on raw dollars and cents? For example, Americans surveyed by COUNTRY Financial said that freedom and control (39%) and desire for more personal space (36%) were their top two reasons for buying a home. It’s entirely possible to have one option be the clear-cut winner when evaluated from a lifestyle perspective but also be the hands down loser from a financial viewpoint. A proper evaluation should examine both. In the full light of day, after all aspects are thoroughly understood and fairly valued, then we can make the best decision, regardless of what that may be.
The answer may depend on where you live too. Some markets are prime places for buyers and others for renters. You also need to understand factors like how long you will be in the area, do you need room for animals, will certain ways of coming up with a down payment negatively impact your retirement and emergency funding goals, are you getting yourself in over your head with a money pit, etc.
The bottom line is: sometimes it’s smarter to rent, and sometimes buying is the right answer. Buying a home for the sake of owning is irrational. Rather than holding dogmatically to one view or the other, make your decision based on the economic factors of your specific situation and your personal lifestyle preferences.
COUNTRY Financial® is the marketing name for the COUNTRY Financial family of affiliated companies (collectively, COUNTRY), which include COUNTRY Life Insurance Company®, COUNTRY Mutual Insurance Company®, and their respective subsidiaries, located in Bloomington, Illinois.
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