Part of being smart with your money means managing how much you buy. And while that might be as simple as not buying goods you don’t need, it might also mean considering alternatives to buying – like renting or leasing – to save money.

Opting to rent something has its own set of benefits. For example, you rarely have to make a large up-front payment the way you would with a purchase, and you likely won’t need to worry about the ongoing cost of maintenance. However, rental costs can add up to more than you’d ever pay for an item in the first place, so it’s important to consider whether renting truly saves you money.

To help, we talked to the experts to find out when renting is the better option and when it’s better to buy.

Home vs. apartment
The decision to rent or buy a home usually isn’t purely financial. You might also crave the stability and pride of owning or the freedom to renovate and landscape how you want. But there are a few factors that make renting the better financial
choice – namely, location.

“Renting usually makes sense unless you are pretty sure you will stay in one home for at least five years,” explained Daniel Mahoney, certified financial planner and president of financial advice firm True Square Financial. “This is because there are several thousand dollars of transaction costs that come with buying, financing and, eventually, selling a home.”

If you’re looking to stay in the same home for the long haul, however, buying could be worth it.

Whether you opt to rent or own, outfitting your home can be expensive. And while it might be tempting to turn to furniture rentals to cut down on your up-front costs, it’s probably worth it to invest in buying.

“Regular household items like furniture and appliances are almost always better to purchase than to rent, unless the need for the item is short-term,” Mahoney said. “The companies that finance these items know that most of their customers lack the cash to purchase these items without financing and can, therefore, get away with charging high rates and fees.”

That doesn’t mean you need to shell out lots of money for expensive furniture, though. Pick up a few high-quality staple items like sofas, and go for less expensive options for pieces that won’t get used as often.

Your vehicle is likely your largest living expense outside of shelter, and the decision to lease rather than buy a car can make a big difference in your bottom line. Leasing might be preferable, as long as you do it right.

“Leasing can be an attractive alternative to borrowing,” Mahoney said. “Rates are often competitive, and the leasing company assumes the risk that the vehicle depreciates in value more than is expected.”

However, you can run into trouble if you use lease in order to drive a car you really can’t afford, Mahoney said. “When people buy cars in cash, they tend to spend less than they do if they finance the purchase,” he said. “It is easy to lose sight of a $10,000 increment in sticker price when it is translated into an incremental monthly payment of $150.”

You can find out your cost to own a car in your state, but the bottom line is to make your car budget and stick to it, even if you lease.

Solar panels
Installing solar panels is a great way to cut your energy bill and help the environment. Both owning and renting have distinct benefits, depending on where in the country you live.

“Typically, you will save more money in the long run by buying solar panels,” said Sarah Hancock, a solar energy expert based in Utah. “Once the panels are paid off, you will own them and all of the energy that they produce, essentially making it so that you do not have to pay for electricity.”

You’ll also get to take advantage of federal and state tax credits that are not available to renters. Owning is especially beneficial if you live in a state with low electricity prices like Washington, Idaho and Louisiana, where the leasing cost might negate the money you’re saving on electricity.

However, if you live in a state with high energy costs – like Hawaii, Massachusetts or California – renting is your best bet, said Hancock. You won’t need to put any money down upfront, and the monthly energy savings should add up to more than your leasing costs, giving you a net savings.

When deciding whether to rent or buy clothing and accessories, Mahoney recommended considering how often you’ll use an item and what kind of quality you’re looking for. While wardrobe rental services have grown in popularity in recent years, it’s still in your best interest to buy your staple wardrobe items. Not only will you wear these essentials often, but there are also a number of simple ways to save money on clothes.

Save money by investing in a few high-quality staples. For men, this might mean a custom-made suit and a few sport coats; for women, a classic black blazer, work-appropriate dress and some denim that makes you feel fantastic. Even formal wear like tuxedos could be worth buying if you’ll use them a few times a year, said Mahoney, because rented versions tend to be lower in quality.

However, some specialty items – such as costumes or other one-night-only formal wear – are worth renting. Similarly, if you want to experiment with high-quality trendy pieces, a rental service could help you try new looks without investing in a piece that might be out of fashion next season.

By Sylvie Temblay, (TNS). is a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.