"Rent or Buy" is a commonly asked question. We can rent or buy a house, furniture, vehicle, appliances and so on.
Money is a way to exchange value. We pay one unit of money in exchange for some value, it could be a product or a service.
Exchanging money in return for a service is not new, we hire plumbers, electricians, maids, painters, fitness experts, educators, coaches, entertainment etc.
Exchanging money in return for a product is not new as well. We buy a house, vehicles, smartphones, appliances etc.
The question we are asking is if we get an option to rent a product, would it make sense. In this case, it is a sofa.
"Do I rent or buy a sofa?"
The answer is not straightforward, as always with personal finance. The first question to ask is "why is money important for you?"
No two people will give the same answer. What is your answer?
Think about it for a few minutes...
If we come back to our question if "Do I rent or buy a sofa?", I would say it really depends on you and there are no right or wrong ways of doing it as it is what works best for you.
If you think renting a sofa for INR 700 per month is better than paying INR 40k for it, then go for it.
Typically, rental companies charge you money upfront that is refundable and they give you 3 month, 6 month and 12 months plans.
They have pre-closure charges depending on the plan you choose, which means if you choose a 3 month plan and want to cancel it before due date, you have to pay one month rent before you can close it.
They make it easier for you to return and you can also choose a replacement after 3 years.
If you are relocating, you just need to return it and you can rent it back once you move to the new city.
What you do need to consider is how much are you spending per month on all the subscriptions?
If it is more than 30% of your income, then you might want to rethink or rework what subscriptions you want vs what you don't use or want.
Here are easy ways to track your subscriptions
- Google sheet link
- Subscriptions Tracker
Tracking your out of pocket expenses (especially your wants) helps you measure how much of your income is spent on wants vs needs and how much you are able to save.
If you don't track this, you may end up spending a sizable portion of your income on subscriptions that you don't use. Ideally you must review every month, so this tracker will help you do just that.
write to me - sreelakshmi@berupeewise.com if you have any questions.
