What is preventing you from purchasing your next investment? Small seemingly insignificant purchases add up over time which prevent us from our next investment. Hopefully, you already know what income you have coming in as well as your expenses. Here are five habits to break to assist you in saving for your next investment.
This is most likely the majority of you monthly income, your largest expense. The goal should be spending no more then 30% of your income on housing. Consider where you currently live- can you possibly get a roommate or move to a less expensive area? If you are able to, I would highly recommend looking into a FHA loan to "house hack". Do this until you are unable to in your situation.
Most likely your second biggest expense. Ideally, you want an affordable car, and work close to your primary residence. Ideas to reduce costs include public transportation, biking, and carpooling. Some additional expenses on a vehicle include maintenance on a car could add up with car payments, insurance, gas, maintenance, parking etc.
Planning your meals and not eating out consistently will save you money long term. In order to do this, consider having a strict weekly shopping budget. This can be a very difficult habit to break since we save time by ordering food and non taking time to prepare. If you "brown bag" on a daily basis, this can save you hundreds a month.
4. Credit Card Debt
Minimum payments may seem low, but over time add up! Consider using a rewards credit card for all purchases and receive cash back at the end of the month. You may be less likely to spend money if you use cash, but know what you can afford before you impulse buy. If you are in debt, make a debt reduction plan. Planning will lead you to paying off debt faster.
5. Focus on Just Saving- Not Earning
Increase your income. You are limited by how much you can save, but have unlimited potential to earn. A 3$ trip to Starbucks will add up monthly. It costs about $90 dollars a month and will boost your savings somewhat but unlikely to make a major difference in your bottom line.
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