One way to automatically save money for your first or next property is by automatically investing a percentage of your salary into an investment account.
Introduction
Saving money takes discipline, consistency, and patience. The problem is that most people lack at least one of those skills. Heck, I lack more than one of those! That’s why most money-saving schemes don’t work. But what if I could tell you that there is a way to save money automatically? Without having to think about it? That’s exactly how I was able to save enough money for my first purchase, and what I continue to do to this day to continue buying properties.
Automate Money Saving
How can you automate saving money? It’s quite simple.
Step 1:
Open a savings account, or investment account, I personally use Betterment, which automatically invests my money in a diversified portfolio.
Step 2:
Calculate how much money you would like to save each year. Here’s an example Home Price: $150,000
| Down payment | $30,000 (20%) |
| + Closing costs | $5,000 |
| Total needed | $35,000 |
| – Money already saved | $15,000 |
| = Saving’s goal | $20,000 |
If my annual income (after taxes) is $60,000, it means I would need to save 33% of each paycheck.
Step 3:
Automatically transfer the percentage of your salary needed to your savings or investment account. Every time you get paid, 33% of your salary should go to your saving/investment account. The logic is that by doing this you are automatically saving. At the same time, you just created your budget! Any money that reaches your checking account is what you can spend.
Step 4:
Pick a day of the week to pay off your credit cards (I do it on Sundays). If you follow your budget, absent of an emergency, you should be able to pay off your credit card every week.
Step 5:
Buy your property!
Conclusion
This post focused on saving money to buy a property, but the same technique can be used for any goal. There are many ways to save money for a property, but I personally find that by automating mundane tasks in my life I can focus on high value tasks, like finding property deals and setting meaningful goals.
What’s next?
Are you already in the process of saving money for your first or next investment property? Take a look at our post on how to choose the right real estate strategy for you. Looking to invest in real estate in Central Florida? Reach out to us and let us know how we can help!
