5 Ways To Save Money For Your Next Investment

One of the most common complaints for new investors is not having enough capital to fund their business. It seems they are in a constant scramble to find the cash they need to fund deals or jumpstart areas that may be lacking. While you will never have enough capital to do everything you want, the odds are you are sitting on extra money without even knowing it. With just a few tweaks in your budget, changes in mindset or lifestyle adjustments you will quickly build a nest egg you can use for whatever you want. The key is committing to sacrifice and understanding that saving a little over a long period of time will give you the money you are looking for. Here are five ways you can save money for your next investment.

• Dive into expenses. When running a business it is critical to focus on the bottom line. Generating revenue is great, but if most of it goes out as quickly as it comes in it doesn’t do you much good. If you are like most people you probably haven’t taken a deep dive into your expenses in some time. You pay the same bills every month without even knowing where the money is going. The first thing you should do if you are trying to save money is look at your expenses. Between your business and house expenses there are probably a dozen or more accounts where you can trim the fat. Cutting a few bucks off your cable bill may not seem like much but when you add it to six other accounts you could quickly save hundreds monthly. A few hundred dollars a month adds up to thousands at the end of the year. You don’t have to dig too deep to find a handful of business and personal expenses you can easily lower.
• Car payment. It seems that everyone wants to drive a nice car. A great as owning a trendy luxury car may be the reality is that you don’t always get a good return on your money. You don’t have to own a BMW or a Mercedes to be saddled with a high car payment. If you are not careful with your down payment, interest rate and sticker price your monthly payment can be $400 or more. As is the case with a housing payment you should start by working backwards. Come up with a number you are comfortable paying monthly and go from there. That number should dictate your down payment, price and whether you decide to lease or rent. As tempting as it may be to upgrade or throw on some amenities they quickly add up and will bring you over your comfort zone. A few months after you are in the car you will wonder exactly what you are paying for and where your money is going. Having a great car is nice but is an area you should sacrifice until you get your business where you want it to be.
• Multifamily purchase. Every new investor should at least consider buying a multifamily starter home. One of the best ways to defer your down payment is by generating money from tenants. If you are currently renting and are considering buying a home a multifamily property can be a great option. For just 3.5% of the purchase price you can buy any property 1-4 units with an FHA loan. FHA loans have reduced interest rates and offer the possibility of getting some, or all, of the down payment and closing cost funds in the way of a gift. If you find the right property you may be able to generate a small monthly profit, or at a minimum use the rent to offset most of the rent. Even if you live in the property for just a few years you set your real estate portfolio up nicely for the future.
• Food. An eye-opening exercise is tracking how much money you spend on food and drinks every month. Between your morning coffee, lunch, take out & sit down weekly dinners you will be amazed at just how much is spent on food. Obviously, you need food to live but that doesn’t mean you have to order lunch every day. With just a few tweaks you should be able to make some changes that will save you plenty. Eating in on the weekend may not be the norm but is a great way to save money. Look at how much you spend on food every month and find ways to trim that number by 25%.
• Credit cards. The best way to find extra money is by avoiding debt. If you already have credit cards you need to take a look at your statements. The interest rates and terms on your cards can leave you running on a financial treadmill. You make the minimum payments, but never see any impact in your balance. It is quite possible that you have promotions or transfer opportunities that can have a major impact on your monthly payment. Instead of paying at 14% you may have a window where you pay 0% interest for a few months. Not only will this help lower your payment but will accelerate how quickly you can lower the balance.

Finding ways to save, or find, money is like starting a new diet. You can’t expect results to happen overnight but the longer you commit the better your results will be.