Should I renew my lease or move somewhere new?

It’s that time of year again. Your apartment lease is coming up, and you have a big decision to make – do you renew or move? Maybe you’ve been surfing Apartments.com (so addicting!). You want to make a smart decision and find a great place to spend the next 12 months - or maybe the next few years. There is no right or wrong answer, but there is a right approach to making the decision – one that’s integrated into your overall financial plan.

Renewing your lease and staying put is a very viable option

Everyone is moving somewhere new, right? Well, no. Lease renewals are actually on the rise. It feels like people are moving, but that’s because it’s top of mind. Maybe a move is the right decision, but staying put can be a smart choice.

One thing you want to avoid is making a rushed decision. Let’s look at a few options for optimizing your current situation:

• If you want time to re-evaluate - Sign a short-term or month-to-month lease. It’s straightforward and it gives you flexibility. You will likely pay a higher rate than a longer-term lease, but you aren’t locked in and you have flexibility.
• If you want a refresh - Try redecorating and rearranging. Changing up the apartment, getting new furniture, or redecorating can be a great way to make your current home feel fresh and new.
• If you want some reassurance - Do some research on rental rates in your area. Ask around and look online to see what others are paying. This will help you know if your rent is fair and give you peace of mind.
• If you’re ready to commit - Renew your lease. Simple and easy. No moving van, no packing, no nothing. And it has the smallest impact on the rest of your life.

Still considering a move? Let’s take a look at the bigger picture so you know what to consider.

Looking at the bigger life picture - the broader impact of your decision

The first thing that comes to mind when we think about renewing or moving is the price tag. Can you and should you pay more or dip into savings to pay for the move? More on this in a minute. First, let’s think through the non-financial impact of moving.

The personal side of things - No matter where you are in life – early career professional, getting married, raising family, or looking at retirement – the impact on your life is important to consider.

• What major life events do you see in the next 12 months?
• What impact does location have on your decision – community, schools, daycare, healthcare?
• Will it support the life and lifestyle you want today? Tomorrow?

Career considerations - Work flexibility has increased recently, but some uncertainty remains about what the future of work looks like.

• Does it affect your ability to work today? What about in 6 or 12 months?
• Does it affect future career opportunities? Is there a thriving job market?
• Do you want the ability to connect, in person, with other professionals?

And here is the one thing that most people miss.

The psychology of the decision - During periods of stress there is a greater tendency to make decisions that are not aligned with the rest of our lives. Before making a big decision, spend time thinking about what matters and understanding the why behind your decisions.

Renew or renest - they both impact your money and your financial plan

It’s just a move. What’s the big deal? On the surface, it may not feel like it, but the choice you make will have a ripple effect on your bigger life picture. Here are a few questions to help you think about the larger financial impact.

• What moving and upfront costs will you incur? Will you need to dip into your savings?
• How will the new rent cost affect cash flow? Will there be trade-offs with other priorities?
• Will the move impact your cost of living in areas outside of your rent?
• Will you be commuting (i.e. needing a new car with a car payment)?
• Does it affect the insurance coverage you need or the cost (auto, renters)?
• If you move out of state, what impact will it have on your taxes?

So should you pay more or use your savings to make this happen? The short answer is that you probably can, but we encourage you to think it over thoroughly. If you pay more, will you need to make a trade-off in saving for other priorities? If you dip into your savings, what’s your plan to replenish your bank account?

The decision to renew or renest isn’t just a financial decision – it’s a financial planning decision. It has implications for your bigger life picture – savings, cash flow, taxes, insurance, and even your career. Looking at your financial plan will help you see your range of choices, understand your trade-offs, and make a smart decision.

So now, the big question: will you stay or will you go? After thinking everything through, are you ready to make a decision? Do you feel good about the personal, professional and financial implications?