It’s good for your savings account to have a goal. Many people save for “a rainy day” then feel reservations about using that savings. Why? There’s no intentionality behind that money. If you’re reading this blog, you likely want to establish a savings account for an investment property. But, if you’ve ever saved for any significant investment in the past, you know that the length of time it takes to meet your goal is frustrating. Not everybody has the patience of a saint.
There’s no guarantees with this advice and the results won’t be instant, but if you want to expedite the process of meeting your downpayment goals for the dream investment property you’ve set your sights on, here are ten actionable ways to increase your savings.
1. Change your auto insurance policy. Consider raising your deductible. If you have a “good” insurance package, you likely have a lower deductible. But, take a look at your driver’s history. When’s the last time you got in a car accident or needed to involve your insurance policy in basic car repairs? If you take the hit on your car insurance policy by raising your deductible, you can save on average $1,000 annually towards your investment property. If this is a risk you are willing to take by redistributing what you would normally pay to have a lower deductible, this tip can pay off fairly quickly.
2. Consider a life insurance policy. Term life insurance is a more flexible plan than whole life insurance. While it’s not suggested that you use term life insurance to build wealth, however a whole life insurance policy doesn’t expire so long as you keep making your payments on time. With whole life insurance, you can make non-taxable withdrawals from your policy to pay for your kids’ college tuition, for example, along with – you guessed it – costs relating to closing on an investment property.
3. Cancel and redistribute subscription fees. These micro-fees stack up. While they feel like nothing, you’re essentially paying for nothing. Reroute this money towards something you actually want, like real estate. Services like TrueBill can flag these idle expenses for you and even cancel them. Tally up what you would’ve spent and bring those funds over to your savings account. Canceling a $30/month gym membership and one streaming subscription can garner you around $550 annually in savings.
4. Cut coupons and buy in bulk. Freezer meals are your friends. Make them ahead and thank me later. For life essentials like toilet paper and toothpaste, things you’ll need regardless of your economic situation or life circumstances, you can coupon and buy in bulk. Take out your calculator while you’re grocery shopping and divide the cost of the package per item being packaged – buy the more affordable option. Keep your eye out for coupons and sign up for alerts to be sent to your inbox for stores you shop at.
5. Carpool or rideshare. People are working from home more than ever right now. Run some numbers for yourself; consider gas prices, car insurance, oil changes, and the basic car repairs you do in about a year. Next, think about when and where you absolutely need a car. If you can afford it, consider ditching your car and opting for public transit instead. If you can’t, consider sharing a car with the other people who you live with. Getting your groceries delivered and asking friends and family for a ride is cheaper than gas and insurance. If this is something that works for your lifestyle, you’ll be surprised how much money suddenly becomes available once you let your car go.
6. Pack your lunch. This is not just for work – if you know you’re going to be out of your house for a while, pack one. Kids do it on field trips. The convenience of eating out when you’re away from home is tempting because it’s necessary so you feel justified in this circumstantial expense. Instead, if you know you won’t be back to your home in time to make lunch for yourself, throw an ice pack in a bag along with a sandwich and some snacks and you’re good to go!
7. Research brand dupes. Some items are made in the same factory. Some of those items cost much more money because they are a “name” brand even though they’re literally the same product. People research these dupes and a quick Google search will connect you to the dupe you’re looking for. For example, L’Oréal cosmetics are made in the same factory as YSL. If you’re a person who wears makeup, that’s a $25 difference between the two different brands’ lip stains. This is another micro expense that’ll add up very quickly.
8. Increase your tax withholding numbers. If you’re someone who gets a tax return, you’re essentially being reimbursed for the tax-free loan you’re giving the government every year. How generous of you! Remember when you first started your job and filled out a W2? On it, there’s a number that suggests how much tax you’d like withheld from your paycheck. If you need the money in your savings account, adjust your numbers accordingly and more money will show up in your paycheck. Drop that increase of funds in your savings account!
9. Refinance and consolidate your debt. People have debt. Having a diversified amount of debt has you answering to a diverse array of interest rates which can end up biting you in the end. Research which credit cards offer to consolidate your debt. If you’re looking to invest in a property that you don’t plan on living in, you can refinance your home. Increase the input to your savings by decreasing the output to what you pay every month because of your debts.
10. Check the policy on your retirement account. Much like a whole life insurance policy, if you’re a first time home buyer, you can get a tax free withdrawal from your account to cover costs on this investment, even if that investment is a multi-family home you plan on renting to tenants.
Nothing’s out of your reach. If you want to make an investment property a reality for you, this dream is 100% attainable. But first, you have to show up for yourself in demonstrable ways that have an actual monetary value you can see and save. Lenders are unreliable variables in the world of real estate. The only thing you can control is you, so take control of your finances in these 10 ways and watch your savings stack up.