For the first time in almost a generation, it may be a better idea to rent a home than to buy one, at least for many Americans. With the housing market still falling in some cities around the country, potential buyers are justified in feeling skeptical about investing their time and money the way many citizens have for years.

This new thinking can leave some, especially young people who haven’t purchased a home before, wondering what they should be doing. If you’re pondering whether to buy or rent a home or are looking for a new place to live, think through some of these issues before you jump into anything.

Buying

Pros

You have your own place. While this comes with the responsibility to make mortgage payments and repairs, it also provides a place to put down roots, decorate with utter abandon, and store your stuff for free.

It might be a good investment. If you buy in a place where property values have plummeted (like Florida or Las Vegas), your home may soon start to rise in value. This means more cash for you.

You’ll get tax incentives. Paying less to the government is always a good thing, and owning a home gives you just cause to keep your money yourself instead of passing it on.

Cons

It’s expensive. When you add up mortgage payments, redecorating costs (and there are always redecorating costs when you buy a new place), and the cost of repairs, owning is often more expensive than renting.

You could lose big. Experts are divided on what exactly is going to happen to the housing market. If you buy and it continues to fall, you can end up underwater in your home fast.

It’s a hassle. Instead of calling a manager or landlord when something breaks, you have to get it fixed yourself, even if it means taking time off work or rescheduling other commitments.

Renting

Pros

Renting gives you flexibility. If a great opportunity pops up across the country or even across the globe, renting doesn’t tie you down like owning your own home does. For folks who want to be able to move quickly and easily, renting is the way to go.

It keeps your assets liquid. Even if buying turns out to be a good investment for you, it ties your assets up. You may have the net worth, but you won’t be able to access it if you need to.

It’s cheaper. For the most part, renters have lower living expenses than those who purchase a home. Even if the monthly payments are the same, homeowners also have to pay property taxes and maintenance, along with insurance payments that are usually higher that what renters pay.

Cons

The landlord makes all the difference. Renters need to face the fact that many landlords aren’t very good. While there are gems here and there, renters usually wait longer than homeowners to have things fixed, and they don’t get a say in the quality of carpet, paint, or installed appliances.

It feels like throwing your money away. While homeowners don’t get their mortgage payments back right away, at least they are investing in something. Even if the bottom drops out of the market, they’re putting their money into an asset, believing in something, while renters just write a check each month.

It’s hard to put down roots. Communities of homeowners connect differently than communities of renters. When you know everyone will be there for at least a couple of years, it’s easier to reach out and make friends. Renting can make finding this kind of community difficult.

What Should I Do?

In the end, there isn’t one option that works for everyone. Instead of trying to find it, examine your own situation. This will help you choose the option that’s best for you.

Sit down and determine what, exactly, you would want out of a house. If you plan to stay in one place for a while, don’t mind the responsibility, and want to know your neighbors, consider buying. If, on the other hand, you want to be able to move quickly, worry about having enough liquid assets, and don’t mind if your furnishings aren’t always up-to-date, renting may work better for you.

So . . . Charlie Sheen. There’s not much to say except that someone should get the poor man some help before it’s too late to save him. If you’re not familiar with the story, thank the lucky stars you were born under. For the rest of us, well, we might as well learn from him since we can’t shut him up.

While there are a lot of life lessons we can learn from Charlie’s very public downward spiral, there are some things we can learn about personal finance, too. Hey, if he’s going to keep talking, we have to make the best of it, right?

1. There’s a Right (and a Wrong!) Time to Ask for a Raise

While Charlie’s life has been a bit of a saga for quite a while now, the current hullabaloo started when CBS postponed the rest of the season of his sitcom, Two and a Half Men, because Charlie was in rehab and seemed to be living erratically. In return, Charlie made some public allegations about the producers. They went back and forth several times, and the network ended up cancelling the rest of the season. Now, Charlie (who, at $2 million an episode, is already the highest paid TV actor around) says that he will not go back to the show unless he gets a raise - to $3 or $4 million per episode.

If I were his boss at CBS, I would laugh in his face, and your boss will laugh at you, too, if you ask for a raise when the company is struggling (especially if you had a hand in causing that struggle). There are good times to ask for raises, not-so good times, and downright terrible times. If you’d like to make more, look for times when the company is succeeding overall, you’ve had some recent personal successes, and people are generally in a good mood.

2. Your Financial Decisions Affect Other People

Charlie’s actions didn’t only cost him his paychecks for the rest of the season, but the rest of the cast and crew lost theirs as well. While CBS did relent and offer to pay them for half of the cancelled episodes, that still leaves some people with significantly less income than they’d planned on. Charlie’s addictions and his erratic behavior don’t just mean that he’s making less this year, but could put some families in very difficult situations.

While you’re probably not going to be responsible for reductions in income for quite that many people, it’s important to remember that the financial decisions you make every day do touch others. If you’re part of a family and you make a large purchase without consulting the others, it might mean skimpy rations for a while or someone else foregoing something they really need. Remember that you’re not alone with your money, no matter how it might feel that way sometimes.

3. Spending Excessively Doesn’t Make You Happy

Charlie’s always been a party boy, so flying from Aspen to Vegas to LA and back to Vegas in a weekend isn’t unheard of. And back in 1996, he once spent more than $6,500 to buy most of the seats behind left field in Angel stadium, just so he would be able to catch a homerun ball (if one was hit that night, which it wasn’t).

I could go on and on about his antics, but I don’t need to. He has a lot of money and a lot of leisure time, and yet it’s pretty clear that he’s not exactly happy right now. We all know that money doesn’t buy happiness, but it’s another thing to see it in such an awful, public way. The next time you’re tempted toward excess, remember Charlie and maybe you’ll think twice.

4. Having Good People Around You Makes All the Difference

One of Charlie’s latest antics is to have not one but two beautiful young women sharing his home. And he’s had several very public . . . relationships, if they can be called that . . . over the last several months, sharing hotel rooms with up to several prostitutes at a time.  He seems to think that these women love him, and maybe they are fond of him, but they also seem to be rather fond of all the stuff he buys them... and the media attention, clearly.

Whether Charlie’s experiencing true love or not, the people he needs right now are stable and wholesome, not ones who are going to push him farther over the edge. And it’s the same for you, especially when you’re trying to make changes in your financial life.  If you surround yourself with people who spend, you’ll spend more, too.  But if you have people in your life who live simply because they know what really matters, you’ll be more likely to live that way, too.

That’s what I’ve learned from Charlie over the last several weeks. What about you?

Image courtesy of Poster Revolution.

Plato once offered an answer to what drives innovation: "Necessity, who is the mother of invention".   This can't be more true today in the banking and financial services industry.  So how have customer needs changed in the last few years, and what does it tell us about the future of money?  I try to answer these question after listening and interacting with visionaries in the financial and start up worlds who were present at the top financial innovation event in the country: The Future of Money and Technology Summit.

Overall, I found myself immersed in a sea of positivism and excitement about the future of financial services.  Yes, there was  dose of realists at the conference, and to certain extend retrograde thinking.  Mikki Langston, one of the attendees at the conference, summarized the vibe in the crowd in her tweet: "There are 2 groups present: those who want to expand their financial empire, and those who want to change finance completely." Yet overall, you could feel the almost unanimous agreement that the future of money is bright and innovative for banking, payments, transactions and money management.   Here is what the future holds:

It Will Be Very, Very Different
The last 3 years have provided the perfect opportunity for start ups and big banks alike to innovate.  In an environment of credit crisis and financial instability, banks are trying to figure out how to make up for loss of revenue, while start ups are finding endless opportunities to fill the big disillusionment hole left by the traditional financial institutions. “What it means to be a bank is up in the air,” said Schwark Satyavolu of BillShrink. “There’s an opportunity to fill huge gaps in what has been a static industry for hundreds of years.”

Customer needs have changed significantly.  After the credit crisis we suffered through, trust in the financial system is at an all time low, making people more aware of their money.  Now more than ever, consumers want to know 3 things:

1. Where their money is:  obviously trust in the institution matters, but also how the money is being used (invested) also matters more than ever.   Is my bank using my money to indirectly finance industries that I am morally opposed to?  is my bank investing in esoteric mortgage-backed securities? How can I influence how my money is used? As Don Shaffer from RSF Bank put it: "Consumers have no control of what their money funds at big national banks."
2. What my return is: whether my return is measured as an interest rate, a social impact, or as services and features, more people are now aware of how hard their money is (or should) be working.  Why should I take a measly 0.05% on my checking account? when the bank is turning it around and lending it to people at 5%, 10% and even 20% (as in credit cards)? 
3. What my fees are: free checking and high-yield accounts are now a thing of the past.  Banks are trying to figure out how to make money, and consumers are painfullyaware of this situation as they experience increases in credit card rates, account fees, and other ways banks are lining up to collect more dough.

"It's expensive to be poor with the disappearance of free accounts and other services at your bank." said Ryan Gilbert from BillFloat.  Some consumers are finding out the hard way, realizing they are better off moving their banking to other cheaper online options such as SmartyPig.com, or local banks  and credit unions.   At Lending Club, we have also experienced an influx of funds from investors who prefer to move their "idle money" into investments in consumer credit (personal loans) and obtain a higher, steady return instead.

Other consumer trends that will impact how we bank? Definitely! Everyone seemed to agree that in an age of hyper connectivity, social networking, and real time lifestyles, banking and financial services are changing for the better, and it will be very, very different in the future.  It already has evolved significantly, if you count how mobile, online banking, and the evolution of personal finance management, credit score management (i.e. CreditKarma.com) and investing tools.  Al these innovations have changed the way we manage and invest our money.

So one thing is for sure: change is happening in the banking industry, and there is no turning back.

Money Will Be Mobile, Virtual
Paul Blythe of Microplace jokingly said "Who uses cash? Primarily, criminals!".  The same way we have seen a move from cash to credit, debit and gift cards, we will see an even more rapid adoption of "mobile money".   Take the example of gift cards becoming obsolete: according to PlasticJungle's Bruce Bower , "most people are motivated to redeem cards within a week, but remaining balances are often forgotten.  Mobile will increase redemption".

In this next year, we should also start seeing more trials of technology that allows account holders to "swipe" their mobile phones at points-of-sale.  Bank of America seems to want to jump in on the technology first with this interesting mobile payment technology test.

Other interesting experiments in this area are the Starbucks Mobile Payment card and mobile credit card payment gadget Square.

Digital money will be even more pervasive in the global economy, as citizens of third world countries are starting to adopt mobile as the de facto standard of carrying and transacting money.  This is a tangible and real way the unbanked and underbanked are gaining access to financial services: with a phone.   Carol Realini of Obopay cited the example of Kenya as the world's most developed mobile payment market, where mobile payments  equal 20% of all commerce, at a whopping $33 average transaction.

Personally, I certainly hope mobile becomes a more prevalent form of payment, perhaps kill the debit card altogether in the distant future.  One thing did seem funny to me: I still had to use cash to pay for lunch and later get a drink at the cocktail reception after the event.  Ironic, isn't it?

Projects and Financial Products Will Be Crowdfunded
Long are the days when people had to knock on doors or send mail to get a project funded.  Collecting money, be it for a non-for-profit organization, starting a business, or other more selfish endeavors, has seen a dramatic change in the last three years with the help of social networking, online based microfinance, crowdfunding, and peer lending.  Even venture capital is currently being raised online.  Lending Club was mentioned in several panels as an example of a new kind of trust building financial institution that uses transparency and simplicity as core to its model.   Try that at your favorite bank.

For example, to get a personal loan, consumers had only 2 options until recently: knock at their bank's door, or ask friends and family.  Now, companies like Lending Club have made a financial product such as a personal loan available at lower rates by allowing other individuals to fund those loans.  In the UK, this concept has had so much success with Zopa pioneering the space, followed by a handful of other companies (ratesetter.com, yes-secure.com, quackle.com) that the media hails it a true challenge to tight-fisted banks.

Danae at IndieGoGo spoke about the establishment of online money-collection as the most efficient way to raise capital, while Jessica Jackley of ProFounder talked about how entrepreneurs will soon have more options to fund their businesses.  AppBackr debuted their model to get mobile apps funded and distributed leveraging the VC funding wisdom of the crowd.  Even the "future of angel investing is all in the cloud", said David Rose of New York Angels.  Crowdfunding eliminates the middle man, creating efficiencies and benefiting both sides of the transaction.  As crowdfunding models mature, we'll see more institutional money and even banks jumping in to invest some of the cash they have sitting around.

Financial Decisions Will Be Information Driven, Made with Social Input
Yes, I did say it during my panel: "The last taboo topic on Facebook is money.  People still feel more comfortable sharing about their sex life than their checkbook on social media".  It is true, how many of your friends have you shrugged your shoulders on thinking: "Did you really have to share that?, where is the dislike button?" But I bet you have never said: "Hmmm, let me help my friend X with her CD  or financial question".  This is not about to change, folks.  Money is a difficult topic to discuss in public.  You don't share your money decisions with your close friends over dinner, why would you go on Facebook to do so?  However, social networking and social media serve as message augmentation and sharing of good news.  Since many of the new financial products are smartly integrating social media as part of their communication strategies, they have the potential of faster adoption and "sharing" among friends, family and even strangers.

Another clear trend is aggregation and visualization of financial data: aggregate data from social networks and money transactions will play a central role in financial decision.  This is already happening to certain extend in places like Mint.com, CreditSesame.com and ReadyForZero.com, where better data visualization of your money and credit situation helps consumers make smarter decisions.   User Experience will become an integral part of managing one's finances, as real time engagement banking will be more expected by consumers.  BankSimple, ING Direct and CBW Bank are examples of new financial organizations that get this concept better than the big banks.

Will we see Facebook become a bank? I don't think so, but social media will most definitely play an important role in the evolution of banking and financial services.

Back End Will Still Be Dominated by the Banks

Antonio Benjamin, Global CTO at Citi Group, painfully reminded the crowd during his conference closing remarks that most innovation in the last few years still depends of the core banking infrastructure.   He instilled some hope when he stated that his "personal aspiration is for Citi to provide entrepreneurs access to the banking infrastructure, including global payment network".  Still to be seen if a major bank would do something that bold.  During a couple of sessions, people got really excited about progress made in the last year to make the banking infrastructure more open and distributed, but the fact of the matter is that regulation and central governance seems to impede significant progress in this area.  It's still to be seen how much advancements in technologies will help the core banking infrastructure advance its centuries old core.  Open source currency? distributed virtual economies? alternative payment systems? I'll give all that a big TBD.

What do you think the future holds for banking?

Drop us a comment below and tell us what you think: how will you see the banking and financial industry evolving? What features or products are you more willing to adopt?  What emerging changes in consumer behavior or attitude will shape up how we use and manage our money?

@RobGarciaSJ