This lesson uses a Better Money Habits video to help students compare the costs of renting or buying a place to live.
This lesson uses the Better Money Habits video Is Buying a Home Right for You? to help students compare the costs of renting or buying a place to live. While the lesson examines the personal as well as the financial reasons for making that choice, the video focuses primarily on the financial costs of buying a home, the costs of a mortgage, and the affordability of buying vs renting. The lesson can be used as an introduction to Lesson16: Shopping for a Mortgage in Financial Fitness for Life, Grades 9-12 to increase student awareness of the costs of home ownership. It could also be used as an extension of Lesson 3: Decision-making with students creating a decision making grid for renting vs buying. The video is about 7 minutes, and the time needed to complete this activity is one 45 minute class period.
Financial Fitness for Life is a comprehensive personal finance curriculum for K-12 students that teaches students how to make thoughtful, well-informed decisions about important aspects of personal finance, such as earning income, spending, saving, borrowing, investing, and managing money. Visit CEE’s Financial Fitness for Life website for more information on the publication and how to purchase it.
- Identify the costs and benefits of renting.
- Identity the costs and benefits of home ownership.
- Explain the guidelines for purchasing a home.
- Define down payment, closing costs, and PMI.
- Ask students if they should buy a place to live or rent a place to live. Encourage them to discuss the reasons for their answers to that question. Tell students that the best answer to that question is “It Depends!” because sometimes buying a place is the best choice and sometimes renting a place is the best choice. Remind students that every choice has costs (disadvantages) and benefits (advantages), and those costs and benefits will vary depending upon the situation and the people involved.
- Distribute copies of Handout 8.1. Explain that this handout and the video will help them identify the costs and benefits associated with buying and renting. Have them complete the table provided in Part A of Handout 8.1 based on their discussion of the information provided in the video. Tell them you will be stopping the video about halfway to allow for that discussion.
- Show the video. Pause at the 2:50 mark. Have students add the costs (cons) and benefits (pros) presented in the video to the table in the appropriate spaces. Discuss their answers before continuing the video.
Restart the video. After finishing the second part of the video, have students complete Part B of Handout 8.1. Discuss their answers once they have completed writing.
To summarize this lesson, review the information included in the video and discuss any additional questions they have about buying versus renting a place to live.
View additional videos from Better Money Habits, including https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/set-budget-stick-to-it ; Building Credit and Keeping Yours Healthy ; Easy Ways to Save on Everyday Expenses , and Create a Safety Net for Life’s Unexpected Events .
Ask students to identify what they plan to do after graduating from high school (get a job, go to college, etc.). Have them create a list of reasons to buy or rent a home that best meets their needs based on their plans. Have students share their ideas with the class.