How Tenants Can Achieve Financial Freedom
- Mar 19
- 6 min read
Updated: Mar 26
Many tenants believe that their current financial situation is set in stone. However, by applying some key investing principles, you can break free from the cycle of renting and move towards financial freedom—even if you’re currently a renter.
Whether you're renting a home, apartment, or condo, the path to building wealth and achieving financial independence is available to you. Here's how you can take some of the principles of investing and start applying them today to pave your way toward financial freedom.
1. Understand the Difference Between Assets and Liabilities
One of the core pillars of sound investing is understanding the difference between assets and liabilities. To become wealthy, you need to focus on acquiring assets and minimizing liabilities.
For tenants, this means:
Assets: Look for ways to invest in things that will increase in value over time. While your rental property is a liability (since you're paying rent without ownership), there are other assets you can acquire—like stocks, mutual funds, or even starting a small business on the side.
Liabilities: Avoid accumulating items that drain your finances without providing long-term value. For example, if you're always upgrading your car or buying unnecessary things, you might be focusing on liabilities rather than assets.
Learn more assets and liablities on Investopedia and take the time to save and invest in assets, such as opening a retirement account or setting aside savings that will grow in the future.
2. Build a Mindset Focused on Financial Freedom
The importance of financial education can not be understated. While traditional schooling may teach you how to work for money, it doesn’t always teach you how to make your money work for you. As a tenant, you can start investing in your financial education by:
Reading books and other content such as NerdWallet's Personal Finance on personal finance and investing.
Taking courses (online or local) to improve your money management skills.
Following financial experts who teach about real estate, stock investing, and building wealth.
The more you educate yourself, the better equipped you’ll be to manage your money wisely and eventually transition from renting to owning investment properties, stocks, or other assets.
"If you don't have a large amount of money, start small. You don't need to be a millionaire..."
3. Start Saving and Investing Early
The earlier you start saving and investing, the better. Even as a tenant, it’s important to set aside funds regularly for investing. The key here is to pay yourself first—a strategy Robert Kiyosaki (a notable investor) emphasizes. This means you should prioritize saving and investing before spending on non-essential things. Start by:
Creating a budget: Keep track of your income and expenses. By doing so, you’ll see where you can cut back on unnecessary spending and funnel that money into investments.
Automating your savings: Set up automatic transfers into an investment account or retirement fund. Even small contributions can grow over time thanks to compound interest.
If you don’t have a large amount of money, start small. You don’t need to be a millionaire to begin investing.
4. Look for Opportunities to Generate Passive Income
One of the core differences is that the rich focus on building streams of passive income. As a tenant, this might seem difficult since you’re not an owner, but there are still opportunities for you to create passive income:
Invest in stocks or dividend-paying assets: These investments can generate income with little ongoing effort.
Start a side business: You could start a business that generates passive income, such as selling digital products, writing a blog, or offering services you’re skilled in.
Peer-to-peer lending or real estate crowdfunding: If you can set aside small amounts of money, these options allow you to invest in real estate without actually owning a property. Sites like BiggerPockets explore crowdfunding more indepth and focus on real estate.
As you build streams of passive income, you’ll have more financial freedom and less reliance on your job or active income.
5. Consider Real Estate Investing a Long-Term Goal
Real estate investing is a great way to build wealth. Even though you’re currently a tenant, it’s important to start thinking about how you can transition from renting to owning income-generating properties. Here’s how you can begin:
Start saving for a down payment: With a solid savings plan, you can work towards a down payment on your first investment property. Many rental properties can be financed with as little as 3.5% down through government-backed loans.
Learn about real estate investing: Read books, attend local real estate investor meetings, or find a mentor who can help you understand the ins and outs of property investment.
Get familiar with the market: Start researching real estate markets in your area or online by using resources available to you such as Zillow real estate trends. Understand what makes a good investment property, whether it’s a single-family home, a multifamily property, or a commercial building.
Eventually, your goal should be to invest in properties that generate cash flow—rental income that comes in each month while you build equity in the property over time.
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6. Change Your Mindset About Renting
While it’s easy to view renting as a temporary situation, it’s important to understand that renting can actually be a stepping stone to greater wealth. If you approach your time as a tenant strategically, you can use it to build a strong financial foundation that allows you to eventually transition into property ownership.
Renting gives you flexibility and freedom, and can serve as an opportunity to save and invest wisely without the heavy financial commitment of homeownership. This can be particularly advantageous if you’re in an area with high property prices, as it gives you time to build your investment portfolio and save up for a property purchase when the time is right.
7. Newtorking and Finding Mentorship
Another key aspect is the importance of surrounding yourself with like-minded people who can help you achieve your goals. As a tenant, this can mean connecting with people who have made the transition from renting to investing. Seek out:
Local real estate meetups: These events are great places to network with property investors and learn from their experiences, check out Meetup Real Estate Events for events in your area.
Mentors: Find a mentor who has successfully invested in real estate or other assets. Their knowledge could be the key to your success.
Online communities: Join forums, Facebook groups, or online platforms where you can connect with others interested in investing.
Building relationships with experienced investors will give you the insight and guidance you need to make smart decisions and avoid common pitfalls.e!
8. Being Rich vs. Being Wealthy
Being rich and being wealthy may seem like the same thing, but they’re actually very different. Being rich is often about appearing wealthy—living a high lifestyle, flaunting luxury cars, designer clothes, and expensive vacations. However, this can be deceiving because many "rich" people are actually living paycheck to paycheck, spending more than they earn, they NEED to work since that is their main income source and are only one emergency away from financial trouble. On the other hand, being wealthy isn’t about flashy displays.
Wealth is built over time through smart investments, assets, and passive income, giving you financial security and long-term freedom. The true distinction? Wealthy people have the one thing money can’t buy—time. The more time you have to do what you want, when you want, without worry or constraint, the wealthier you are. It’s not about how much you spend, but how much freedom you’ve created for yourself to enjoy life without limits.
Final Thoughts: The Path to Financial Freedom Starts with You
While being a tenant may feel like a temporary situation, it doesn’t mean that you can’t start working towards financial freedom. By applying key investing principles such as understanding assets vs. liabilities, educating yourself about money, and considering real estate investing, you can put yourself on the path toward wealth-building.
Remember, financial freedom doesn’t happen overnight, but with smart choices, a shift in mindset, and consistent action, you can move from renting to owning, and from financial dependence to independence. Start small, stay focused, and most importantly—believe that you can achieve your financial goals!
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About the Author Ricardo Reis - Learn About Ricardo
Entrepreneur, Inventor, Investor, Military Veteran. Ricardo is a member of G3 Management & Investments a division of Great Lakes Real Estate and a real estate professional. He is a real estate professional and a successful real estate investor for over 15 years.
NOT INVESTMENT, FINANCIAL, LEGAL, TAX, OR OTHER ADVICE: This blog is for informational purposes only and not a substitute for professional advice. We do not offer advice, solicitation, recommendations, or endorsements. You are solely responsible for evaluating the information's merits and risks. Always consult a qualified professional before acting.
