How Can 10 Year Olds Make Money In 2-3 Days How You Can Save $20,000 Within Two Years To Purchase Your First Home

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How You Can Save $20,000 Within Two Years To Purchase Your First Home

Thinking of buying your first home, and ready to start saving for that initial down payment?

It is understandable that you would want to own a home. There’s just something proud about saying, “this is my home.” There are also other reasons such as bad landlords who don’t fix anything, knowing you could pay your mortgage instead of putting money in your landlord’s pockets every month, building equity or/and you are thinking about starting a family and raising them in a home that is yours .

Whatever the reason, I think “owning” over “renting” is a much better idea–and I’ll explain why.

My favorite reason is that every time you pay off your mortgage, you become richer. Each month, when you pay your mortgage balance down, after interest and after all other fees, you own a larger percentage of the home you live in, which makes you wealthier. For example, if you buy a home for $100,000 and pay it off over 10 years: let’s say you pay $600 a month for 10 years, you’ve roughly paid off about $72,000 over that time. And during that time you increased your net worth by approximately $72,000. The $72,000 is part of your overall net worth because you own that part. If you were to sell your home, this is how much you would make. If you rented all that time, then you would still be worth the same, and not richer.

There are many other reasons why owning is better than renting, but that’s not what this article is about. But hopefully, by now, you’re convinced that you’re making the right choice to move out of your rental.

Let’s get started!

How will you save for that first home, even though you may feel like there’s no money left each month?

As a former financial planner, I quickly learned that your income does not determine how wealthy you are. It’s how much money you save from what you’ve earned that determines how rich you are. Someone who makes $1,000 a week and spends $1,000 a week is poorer than someone who makes $500 a week and saves $100 a week.

I have met countless people on smaller incomes with much larger bank accounts than those who earn double or triple. The truth is, the more you earn, the more you spend.

So the fact that you feel like you have no money left is a result of your spending habits, and not entirely due to your income. So before you say you don’t have money, I’ll stop you by telling you that you do.

The trick is to invest small increments of your current income to achieve ‘BIG SAVINGS’. By allowing the bank to automatically withdraw small amounts of your income each week without you noticing, you will slowly grow your wealth each time you get paid. The professionals call this strategy the “pay yourself first”. Before you spend anything, you pay yourself first when you invest a portion of your salary each week.

Even if you spend every last dime you have left, you’ll still get rich every week.

So how does this work?… It’s called ‘investing.’

Investing is that simple. The trick is to let your advisor do most of the work, and not pay attention to the markets or all the other distractions that come with it. Go to your bank and set up an appointment with a financial advisor and tell him/her you’d like to put away $100 a week to start saving for a house. It is important that you let your advisor know that you will need to withdraw the money soon, so that he does not put your money in a “locked” account that you cannot touch until after a certain period of time. In Canada, we have TFSA accounts (tax free savings accounts) where you can put your investments in and take them out at any time “tax free”. If you don’t live in Canada ask your advisor which account he recommends you put your money in to get a good return and withdraw in the next 2-3 years with as few fees and taxes as possible.

This is what happens when you only invest small amounts of your money each week.

If you invest $100 per week with an average annual return of 5%, you will have a return of approximately $5,460.

Savings in year 1: $5,460

If you save $100 a week for two years with a 5% return, you would have approximately $11,193 by the end of the 2nd year.

Savings in 2nd year: $11,193

Today’s banks only require a 5% down payment. If you’re buying a house that costs $200,000, you’ll only need $10,000 for the down payment. After 2 years you will definitely have your home.

Now, what if you have a wife? That’s a second income and if he/she also saves $100 a week, then things start to get interesting.

If you and your spouse both invest $100 a week with a 5% average return on investment (ROI) then you can save up to $22,386 in just two years! Amazing!

Savings in year 1: $10,920

2-year savings: $22,386

The good thing about putting a large down payment on your home versus the minimum (5%) is that you get a better mortgage, you will lower the monthly mortgage payment and you will pay off your house sooner.

Hopefully, this has helped you and motivates you and your spouse to start saving. Trust me, it will feel so… good when you get those keys in your hand to your first home.

________________________________________

Other Tricks and Tips to Save Extra Money.

Saving the nickels and dimes- One of my suggestions outside of investments is to save your pocket change. Every time you buy something and get change, instead of spending that change, you put it away. Do it for a whole year and see what you have left.

I found a good video where this couple who got rid of all their change for an entire year and saved $1,902.50.

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