Everyone dreams of having an investment basically as a means to make their money grow and save up for the future. However, people often end up giving up such desires especially for those working nine to five, who generally think they may not have enough to set aside for savings.
Such misgivings have further been magnified by the COVID-19 pandemic, raising fears of unemployment due to failing economies, however, most industries have acknowledged the crisis as a wake-up call and gave rise to the work-from-home or remote work practices.
Adapting to the current situation has been quick and more people have returned to work albeit remotely and in the comfort of their own homes.
Is it possible to save money today?
This may be a difficult time for everyone, especially those who want to save for the rainy days on top of earning their daily keep and unknown to many, there are practical ways to plan and strategise around your current income to help you save money by looking to invest in property.
Financial advisors believe that that current pandemic situation opens doors for Australians to take advantage of the current low-interest rates and people start selling properties and other assets to free up cash.
With proper planning and sound financial advise, now is the best time for Australians to consider thinking about their future and create multiple streams of income with property investment as a sound and viable option.
Assess your spending habits and activities
Your ability to track spending is the first step to jumpstart your plan to set aside your money for savings.
Make a list of your income and compare it against your basic expenses, credit payments, recreation, and lifestyle to give you a better understanding of how your money is spent.
Should you go ahead and pursue your desire to save money, it will be a good practice to set a minimum share of 20% from your income for savings and get a grasp of how your money comes and goes.
Doing so you will be able to know how to budget effectively and determine if you need to cut back on spending to help you get more value out of your income.
Changing your lifestyle to allocate more money for debt servicing can guarantee long-term gains and provide you with more financial freedom at the soonest time possible.
Doubling up your loan repayments can help you shorten your loan and credit repayment terms, and give you more opportunities to settle your debts. Doing so would allow lenders to adjust your interest rates for advanced payments and additional discounts for higher debt repayment amounts.
Remember that a longer payment term means compounded interest rates over time, so save a lot by getting it settled as soon as possible.
Create a budget
Budgeting is one of the best ways to keep track of your income, expenses, and how you may be able to cut back on spending and allocate it to more pressing and essential expenses or regular savings.
Most people find the 20/30/50 method practical and useful. This means that you allocate 50 your income to personal necessities, 30% to material or lifestyle spending, and 20% for savings.
You can also try to cut down on grocery spending, dine outs, or buying new mobile gadgets and instead channel the money to your savings.
Gradually build up your savings.
There are a lot of practical ways to increase your saving capacity such as cutting back on groceries by planning our daily meals and eliminate food wastage.
You can also save on utilities by practicing smart energy conservation at home or commute to work on some days to save on gas. When you combine all these, you could set aside a few hundred dollars a month for savings.
It may seem difficult to save money but bear in mind that through a careful assessment of your lifestyle and spending habits, you can someday realise your desire to save up money to invest in the real estate property of your dreams.
Here are important considerations when planning or getting involved in property investment.
Determine your purpose for investing in property
Planning is crucial and you must determine how to acquire, set-up, and manage your desired property to know if it is a good fit for you.
Remember that property investment is a capital-intensive venture, where even a single property costs hundreds of thousands of dollars. It is, therefore, important that you have a clear mindset and understand all potential risks involved.
Identify and study your market, as well as identify how you want to manage your desired investment to reduce possible risks and avoid stress as you move forward.
Always be realistic
Always think realistically by looking at your cash flow potential and capability to sustain your investment even before your first tenant or client.
If you are starting on a fresh territory, expect to shoulder your overhead and other incidentals out-of-pocket for at least a month or two as you wait for occupants to rent your space.
Understand your goals as an investor
There have been property investors who lost their venture after making the mistake of not carefully understanding the details of property investments.
It is always best to understand your goals as a property investor. Some properties can be purchased and sold for profit in a short time, while some would require some renovations, re-zoning, or some design modifications before it can be listed to make it more appealing to clients.
Nonetheless, with money saved up for your property investment plans and doing every effort to reach and sustain your goals as an investor can set you up more financially stable and fulfilled in the long term.