Are you good at saving money?
Sadly, most of America isn’t. On average, single people under the age of 34 have about $2,729 in savings. Regardless of what part of the country you live in, this wouldn’t last very long.
Think about people you know or perhaps even yourself. When Covid-19 struck suddenly, people across America were left jobless. Of course, the stimulus probably helped in the short term, but how about when the government stops bailing you out?
The point is that you shouldn’t be relying on a random $1,200 check from Uncle Sam during dire circumstances. You need to start saving for a rainy day…NOW.
When a company goes through financial struggles, they typically look into 2 things: cutting costs and creating more revenue. You need to be a lot like a company in terms of how you manage your money. Rather than focusing on income generation, you first need to learn how to cut costs. By learning to live below your means, you will be able to enjoy a comfortable life without making any excess money. Then, once you’ve mastered this, you can look into ways to make additional income.
In this article, you will read about how to save money by lowering your housing expenses. Each option can be done without living a spartan lifestyle, but it does take discipline. Look into your housing costs and see where you can start trimming your expenses.
Before you know it, you’ll have plenty of excess money to save.
Do you rent or own a home?
In either case, you’re probably doing it all wrong. First, let’s look at the rental side of things. People rent rather than buy for a variety of reasons. Some people do it out of pure necessity, others want to do it to live in the posh part of town to flex on their friends, and some do it to save for a down payment. Consider the latter two reasons. If you’re spending all your money on rent for status or to look cool, you’ll end up broke in the long run. Those who are saving for a down payment have the right idea, but it only works if you can actually save money. If you’re spending the majority of your salary on rent, how will you ever be able to muster up enough for a down payment?
Then there’s homeowners.
Congratulations, you own a home. In many ways this is one step ahead of renting because you’re building equity in a property while paying down the loan. Here’s the problem: many Americans view their home as an investment, when in reality, it’s sucking them dry financially. Like the people putting all their money into rent, those who put all they have into their mortgage are living on the edge. What if something breaks and you have no money to fix it?
As a renter or a homeowner, it’s never financially savvy to pour every penny you have into housing. Instead, you need to find ways to minimize expenses to maximize savings.
If you fall under the rent category, the best solution to this problem is to reduce your rent costs. This could mean moving out of the city into the suburbs. It could mean having roommates to split the cost of rent further because one bedroom apartments tend to be more costly. Perhaps it’s doing the “uncool” thing by living with your parents for a year to build up capital. Whatever the case may be, try to cut your rent down by a few hundred dollars or more per month.
Even if you’re only saving a few hundred dollars a month on rent, you’re making great progress. Earlier in this article, it was noted that the average American under 34 has about $2,700 or so in savings. By reducing your rent by only $200 per month, you can accumulate $2,400 which is more than most people seem to do in several years. What if you could save $300 a month? The possibilities are limitless.
Sometimes playing great defense can be the best offense. Start looking for ways to reduce your rent as soon as possible.
Like houses, families come in all shapes and sizes. Each person’s living situation varies, however one thing that remains constant is your monthly mortgage payment. Since you’re already in a house, you need to start turning it into an asset by having someone else pay your mortgage.
At some point in your life, you’ve probably had roommates. They come with advantages and disadvantages. A major advantage of having roommates while owning a home is that you can charge them rent and put it towards your house. This is the essence of house hacking. Depending on your comfort level with sharing space as well as your family situation, it can be an extremely effective option. If your mortgage is $2,000 a month, but you can rent a spare room for $1,000, you’ve essentially earned money without doing anything that crazy. Then, if you rent another room, you’re living for free. Another way to house hack could be to rent out an in-law suite. If you live in a multi-family home, you’re probably already house hacking even if you don’t know it.
If you want to save money, start by cutting out unnecessary housing expenses or turn your house into an asset. Consider which steps to take first by examining your own personal situation, then begin executing this strategy.