Could Renting Be Part of the New American Dream?

“Renting is throwing money away.” Has anyone ever told you this? Well, I’m here to say: It’s bad financial advice.

My husband and I have owned four different homes in three cities since 2010. If I wanted to, I could buy a house in cash today. But for the last three years, I’ve chosen to rent instead — and my net worth has grown by leaps and bounds because of that choice, not in spite of it.

This is always a hot topic, especially because renting challenges the traditional rhetoric that homeownership is the ultimate path to wealth. And I get it — owning a home is part of the “American Dream.” But if it doesn’t lead to financial freedom, homeownership may be more like a nightmare.

Let me show you how renting, when done intentionally, can actually make you richer.

Renting avoids the hidden costs of homeownership

When you own a home, you’re not just paying the mortgage — you’re also responsible for home maintenance, property taxes and insurance. In fact, Bankrate’s 2025 Hidden Costs of Homeownership Study found that the average annual cost of owning and maintaining a single-family home is more than $21,000.

Now, you’ll incur some of these costs when renting, too. Unless your rental unit includes utilities and internet, you’re probably going to have to pay out of pocket. You’ll probably pay less in electricity than you would in a large, single-family home, but for the sake of argument, let’s take these average costs at face value.

Omitting the expenses you’ll still have when renting, homeownership costs an average of $15,391 — that’s almost $1,300 you could free up each month.

And don’t forget about mortgage interest

My clients are always shocked when I have them review the amortization table for their 30-year mortgage. In the early years of your mortgage, a large percentage of your monthly payment goes toward interest. You’re not really building equity in the first few years of a mortgage — you’re mostly paying interest.

Let’s say you borrowed a $420,000 mortgage. You qualified for a 6.75 percent mortgage rate on a 30-year term. Your monthly payment is $2,724. Here’s how the costs shake out in the early years of your home loan, excluding property tax and insurance costs:

Of your first mortgage payment, only $362 pays down the principal balance — a whopping $2,363 goes toward interest. The balance does shift over time, and by the end of your 30-year term, the bulk of your payment goes toward the principal. But how likely is it that you’ll see the mortgage through to the bitter end, without selling or refinancing (and starting the clock all over again)?

I’ve helped five clients make the decision to sell their homes in 2025, and none of them lived there longer than a decade. So much of their money has gone to interest, and they won’t get much equity in return.

After five years of dutifully paying $2,724 every month, you’ve only gained about $25,000 in home equity. Meanwhile, your mortgage servicer will have made nearly $138,000 from your loan interest. Your five years’ worth of mortgage payments cost you $163,440, and in return, you got $25,000 in equity. Hardly seems worth it.

Renting frees up capital for wealth-building

“Real estate always appreciates in value.” This one’s a myth — just ask anyone who sold a home during the 2008 financial crisis. My husband and I paid $10,000 out of pocket to sell his home at the time.

Yes, real estate can appreciate, but it’s also highly market- and location-dependent. In the past three years, the investments I’ve made in the stock market and my financial education business have significantly outpaced the return I would’ve made on a home in my local market — and with much less headache.

Unfortunately, several of my clients bought their homes at the height of the pandemic boom and are now seeing their home values decline from their peaks.

According to those numbers, you could save more than $9,000 per year by renting. That money could go a long way for many Americans, and even further if you reallocate that money into wealth-building assets.

After selling my home and returning to renting, I took the proceeds of the sale and invested in growing my business — that cash injection allowed me to surpass my first $1 million in revenue. In the time since, my husband and I have also contributed the maximum amount to our 401(k)s and individual retirement accounts (IRAs), allowing us to pursue early retirement.

Renting can offer new social networks and income opportunities

Some of my older coaching clients tend to wrongly believe that renting equates to a decrease in quality of life. I’ve been happy to dispel that myth when they comment on the dance, improv and travel that my renting lifestyle accommodates.

I live in a one-bedroom rental in a walkable neighborhood filled with restaurants, music, theater and fitness. Post-COVID apartment buildings often feature co-working spaces, gyms and even social events that allow me to meet people from all walks of life. I felt a lot more isolated in the suburb where I used to live, which was more homogeneous, less active, and farther away from cultural events.

I’ve also been able to find more side hustles than when I lived on the outskirts, like teaching financial literacy classes or dog walking and babysitting for neighbors in my building.

Why renting can be strategic

According to Bankrate’s 2025 Emergency Savings Report, fewer than half of U.S. adults have enough emergency savings to cover three months of expenses, and about a quarter have no emergency savings at all. When you don’t have money set aside for a rainy day, it’s especially important to have tight control over your monthly spending — predictable monthly payments are key.

A fixed-rate mortgage may seem stable, but property taxes can always go up. Insurance premiums can rise, and maintenance is always more expensive than you think. Avoiding surprise repairs to water heaters, HVAC systems or roofing can also decrease the anxiety of not having enough cash savings on hand, especially when those repairs cost thousands of dollars.

Final thoughts: Owning a home can be great — if it fits your financial plan

As a first-generation American, I felt the weight of my family’s expectation to live out the American Dream — after all, they emigrated here so I could realize it. But I’m living proof that renting isn’t a step back, nor should you feel any shame for choosing to rent.

It’s been a strategic move that’s made me richer — financially, mentally, and emotionally.

Think of rent the same way you think of a gym membership or software subscription — it’s a monthly cost that may support the lifestyle you want. It’s not “throwing money away.” It’s buying peace of mind, freedom of movement and time to grow wealth in other ways.

For me, real wealth isn’t found in square footage. It’s in the daily opportunity to move and live freely according to what aligns with my own version of the American Dream.