Name: Renting vs Buying a Home: Real Life Financial Literacy and Life Skills
SKU: 6587b6b26f5daa001a277a8c
Price: 39.99 USD
Availability: InStock

About this resource

What's inside this resource

Have you heard people say that renting is throwing money away? Is that always true? This comprehensive high school financial literacy and life skills lesson helps students understand the costs of renting vs buying a home. This is crucial information that is often not taught in schools. Make sure your students are prepared for making real-life financial decisions down the road!

What's Included:

6 Page PDF:

Title Page/Teacher Instructions

Handout that explains parts of a mortgage: principal vs interest and a sample of an amortization schedule

Handout that explains about the costs of renting vs buying and which ones are "unrecoverable." 100% of your rent is unrecoverable, but there are very few other costs associated with renting. The interest of your mortgage, strata fees, HOA fees, property taxes, home insurance, closing costs, realtor fees, maintenance, repairs, and more are all unrecoverable costs of buying: these can add up quickly too!

2 Page Research Project: Students look for homes in their area to buy and rent and calculate which one is a better deal based on the information they have learned.

Bonus Handout that delves deeper into a the nuance of the situation: for example, if people are good at saving or not (optional).

Grades to Use With:

This lesson is designed for high school students in regular or special education classrooms. The handouts are written at a simple reading level and that math skills required are using percents written as a decimal: for example, calculating 35% of your monthly income by multiplying your income by 0.35

If you enjoy this product, check out other financial literacy activities in my store:

Income Tax Notes and Practice: Teach your students how to file their taxes in Canada or the US!

Compound Interest: Hook Students on Financial Literacy

Net Worth: Assets - Liabilities = Equity

In the classroom

Teaching tips & learning objectives

Learning objectives

Explain the difference between the principal and interest portions of a mortgage payment.
Calculate a home's estimated annual unrecoverable cost using the 5% rule and convert it to a monthly figure.
Research real rental and home-purchase prices in their own area and record them in a comparison table.
Calculate a monthly housing budget from an assumed hourly wage and reflect in writing on whether buying or renting fits that budget.

Teaching tips

Show the optional linked video (pwlcapital.com's 5% rule explainer) before the personal-research worksheet to reinforce the rule before students apply it.
Students will need internet access to look up their state or province's minimum wage and to find real local rental and home-purchase listings.
Confirm students can multiply, divide, and find the percent of a number before assigning the worksheet, since the lesson explicitly requires those math skills.
Use the two-income household case study on the final page as a discussion starter about savings discipline before students complete their own reflection.

Skills covered

Percent-based financial calculation — students compute 5% of a home's purchase price and divide by 12 to compare it to monthly rent.
Real-world data research — students locate and record three actual rental listings and three comparable homes for sale in their own area.
Personal budgeting math — students calculate monthly income from an hourly wage and apply the 35%-of-income housing guideline.
Financial reasoning and reflection — students write a reflection weighing their own local numbers against the buy-versus-rent tradeoffs shown in the case study.

Good to know

Questions teachers ask about this resource

What is the 5% rule used for in this lesson?

It estimates that a household loses about 5% of a home's purchase price each year to expenses it never gets back, such as taxes, repairs, and mortgage interest; dividing that figure by 12 gives a monthly amount that can be compared directly to local rent.

What does the two-income household case study compare?

It compares a couple earning $140,000 a year renting a $2,000/month apartment versus buying a comparable $4,000/month property, showing side by side how much of each option is money they never get back versus money that builds savings or home equity.

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Curriculum

Standards, concepts & topics

Standards

7.RP.A.3 — Use proportional relationships to solve multistep ratio and percent problems. Examples: simple interest, tax, markups and markdowns, gratuities and commissions, fees, percent increase and decrease, percent error.