You want to be rich! One of the fastest ways to become wealthy is to create a successful business, but it is easier to say than to do. One of the safest ways to become wealthy is to invest in real estate. By all means, if you can do both do it! In this post, which focus is “real estate for beginners”, I will give you my tips to get enough for a down payment. The issue with real estate is how to start investing! Once you have the first and the second rental properties, things begin to be easier.
So if you are a first time home buyer or investor, the goal is to find out how can you get enough for your first down payment. I write this post on personal finance because I do believe that financial education is the best approach to achieve your goals.
Overall investing is a mindset. You have to switch from the pleasure of buying things to getting satisfaction in saving money.
First, set a goal!
First, I would recommend setting a goal. You choose an amount you wish to save, and write it down. Now select a date. Your objective is to reach the determined amount by the selected date. The chosen amount has to be achievable. There is no point to say you want to save one million over the next year if you are on the minimum wage, though you can set up a challenging goal if you believe you can reach it.
Once your target is defined, set up some intermediate milestones, also with a date for each one. Write them also!
It helps to have a benchmark! You can use it to measure your progress. If you beat your benchmark regularly, then it is time to be more ambitious and increase your target. If you fail short of your intermediate steps, you can adjust what you are doing to reach your goal, and take corrective actions. Always try to adapt your actions first. Setting a lower final target and smaller intermediate steps are the last things you should do. Adjust the ultimate goal only when you worked your brain to the bone, and you cannot do anything more to improve your savings or income.
Put the written goal somewhere where you see it every day, on the wall at the entrance of your home, for example, or any other room in which you spend time. You have to see it regularly.
Now your goal is set up, how can you achieve it?
Control your spending!
The most efficient way to save is probably to start not spending your money.
What I do before buying something I want is to ask myself: do I really want that thing and why? And then I ask myself: can I wait before buying it, maybe a few days, or a week, or even a few months?
Buying things induce pleasure in our brain. It is an evolutionary feature. But you should not be driven by your emotions.
Asking yourselves questions about why you want something and introducing a delay helps you to get back the control you need to build your wealth.
Do you know why the majority of rich people become wealthy? Because they do not spend money on superfluous things, and they try not to overspend! Who do you think will more readily use a coupon, a rich person, or a poor person? The wealthy one!
Do not overspend!
It is so easy to overspend, do you need an internet connection with the fastest upload speed? Or a less expensive connection with slower speeds, though sufficient enough to fulfill your needs, is maybe a better option.
Do you really need the latest phone? If you keep your current phone for one more year, you will save money each month! And about your phone plan, there are maybe cheaper plans that would also work for you!
Another thing, people spend a lot of money on restaurants and take-outs. If you try to cook sometimes, you save money. It adds up quickly. And cooking is fun, and it can be a time you spend with your family making something together. I love to cook!
Overall, you have to rethink how you spend money. You will be surprised how small adjustments add up quickly. You save 5 dollars here, 10 there, you may end up with saving hundreds each month.
Get more money out of your work!
The second way to save more is to make more, and not to spend the salary increment. Maybe you can get a promotion, or perhaps you can find another employer willing to pay you more. Sometimes, if you find a better paying job, your current employer will be ready to match the offer you got. You have to look for better job opportunities, always!
You can also find a side hustle. It is highly popular among millennials. However, according to BankRate.com, the median income was $200 a month. It means that half of the side hustles provided with less than $200 a month, sometimes with a lot of efforts. And about two-third of side hustlers made less than $500 a month. Do not be fooled by the average of $686, less than 25% of the side hustlers make that kind of money.
So before starting a side hustle, I would suggest you to see if you can increase the pay of your 9-to-5 job.
Invest the money saved and earned wisely!
If you plan to use the money you save or make in the short term, open a high yield saving account. The stock market, as good as the returns are in the long run, should be only for your long term investments! What I call short term is less than two years, and long term would be at least five, but probably more like eight years.
The path to financial freedom
As you follow those tips, you will see your savings increase, every day closer to your goal. At the start, it may be hard, but each day, it will be more natural for you to follow those steps because you will see your saving accounts grow. And when you reach your target amount, you will be able to buy your first property.
You will be able to use somebody else money by taking a mortgage, leveraging your initial investment, and you will pay your mortgage with somebody else money, your tenant’s money! If you did not see it yet, check out my post about leverage.
When you go down that road, your net worth starts increasing quickly. It may require some efforts from your part to buy your second property, but you have started on the path of financial independence.
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Questions of the day: Did you started investing in real estate? Was it hard to be able to make your first down payment? And if you do have a side hustle, what do you do?