Have you ever been a victim of the Parkinsons Law? Expenditures rise to meet income? Where every wage rise you get it quickly swallowed up in your spending? And before you know it, you can't imagine ever living on less ... even though you did once!
Even those who have large incomes need to keep a budget as it is important to your success. However, if you’re someone with less spare cash at your disposal you’ve got be really creative and disciplined to make the most of every cent you have.
Don’t ever let anyone tell you (including yourself) that you don’t make enough money to invest!
Here’s how you can get started with investing even with a small income:
- Be patient cause it will really take time to build up your nest! Remember that investing is a long term strategy no matter what size your income is. You need persistence and sustained effort.
- Establish a pattern of saving weekly whether it’s $15, $50 or $500, put money into an interest bearing savings account consistently. Lenders will want to see that you are a stready saver.
- Start small by buying an investment well within your budget but don’t buy ONLY because you can afford it. Build your strategy first.
- Combine resources with other investors and buy through a joint venture. But remember the following factors as they should be part of the agreement:
- A sinking fund to cover vacancies, repairs and strata fees
- Who is responsible for what
- how insurances, taxes and depreciation will be managed
- How long the asset will be held and what will be done with it, including percentages of ownership
- What to do if someone wants to leave the JV agreement
- How it will be managed
Part ownership is much better than NO ownership at all!
- If you currently own a home, use your equity to obtain the capital you need to buy an investment. Find something that will be cash flow positive before taxes.
- Unless you are able to put 20% down you’ll be required to carry LMI (Lender’s Mortgage Insurance), which can significantly add to your repayment costs. Be sure to include these costs when calculating what you can afford.
- Buy an off-the-plan purchase. Well obviously you’ll have to take possession but after a perios of time you can turn it into an investment.