If you have spent your life renting, you have likely graduated slowly over time to larger and larger homes and higher and higher rents. This is typically common in situations where people gradually earn more money, or their family becomes larger. However, there is an important principle of renting that many people do not know about or consider.
What is the 80/20 Principle?
The 80/20 principle, also called the Pareto principle, states that 80 percent of effects come from 20 percent of the causes. This principle has been applied in the past to many different events. However, it has also more recently been applied to marketing, management, decluttering, and personal finance. Now it is also being applied to renting.
How to Apply the 80/20 Principle
There are several different ways that you might apply the 80/20 principle to renting. You may even be able to come up with more applications for this principle in your life once you fully understand how it works. Here are some of the most common ways to apply this rule to your renting situation.
Enjoyment
You could consider the expense of rent with the 80/20 rule in terms of enjoyment. You may be getting 80 percent of your enjoyment from 20 percent of your space. If this is the case, you may want to consider renting a smaller home or apartment for a lower rent. Downsizing in space is often beneficial in many ways, especially if you are not typically making use of the space you currently have. Less cleaning, less upkeep, and less money.
NEXT: Taking Action
Lisa Kroulik is a freelance content marketing writer with eight years of experience. She has a special interest in helping readers make sound financial decisions and financial recovery topics. After having filed bankruptcy in 2008, Lisa took the opportunity to make a fresh start and learn from her mistakes. Today she has a credit score of 830 and no debt other than a mortgage.
