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What is your advice for someone who is learning to save?

Q. “What is your advice for someone who is learning to save? I have almost paid my car loan off, owe my parents some money, have no other ‘debt’ as such, no credit cards, but struggle financially and I am living at home. Should I look for an investment property or at buying my first home? I find it all confusing and very overwhelming. I do not want to live pay to pay. I want to live a financially stable and fulfilling life.”

Christina

Answer

Great question Christina! I can understand where you are coming from. There is a lot of pressure in Australian society to either buy a home to live in or to buy an investment property as quickly as possible. At this stage for you though, I feel there are a few other things that it would be great to get on top of before considering property ownership.

Firstly, and as you have mentioned, learning to save is a top priority. If you’re not used to putting money aside regularly, you’ll probably find it difficult to manage a mortgage that has to be paid each month. To get started, the easiest thing to do is to set up an online savings account with a bank other than your usual bank provider, that way it’ll make it a little harder to access your money! Next, set up an automatic transfer from your regular account into your savings account immediately following each pay day. We call this ‘paying yourself first’ and this will stop you from spending all of your paycheck before you know it, with nothing left over for savings.

I suggest that you make paying your car loan off a top priority too, so contact your lender and arrange to increase your monthly repayments (whatever you can afford, even if it’s just a little) and this will help you reach that goal faster and should also save you on interest. Although your parents probably aren’t charging you interest, you’ll feel good about paying them back I’m sure and there are two ways you could go about this. You could set up a transfer to them each pay cycle in order to pay them off slowly over time, or you could build up your savings account until you have enough saved to just pay them back in one lump sum.

The hardest thing is probably working out how much you can afford to save, so completing a quick budget will help, just write down how much you get paid each pay cycle and then list all of your expenses below. Hopefully you have something left over and that is what you can use to build your savings account.

Once you have repaid all of your debt, and managed to build a savings account, you’ll then be in a position to look at other investment options – that could be property, or even shares.

Author: Sarah Riegelhuth

Sarah is co-founder of Wealth Enhancers and League of Extraordinary Women, author of Get Rich Slow, blogger, speaker.

Disclaimer: Please note this article is of a general nature and should be used for informational and educational interest purposes only. Please seek professional advice before making any decisions in relation to your own personal circumstances.

Q. “What is your advice for someone who is learning to save? I have almost paid my car loan off, owe my parents some money, have no other ‘debt’ as such, no credit cards, but struggle financially and I am living at home. Should I look for an investment property or at buying my first home? I find it all confusing and very overwhelming. I do not want to live pay to pay. I want to live a financially stable and fulfilling life.”

Christina

Answer

Great question Christina! I can understand where you are coming from. There is a lot of pressure in Australian society to either buy a home to live in or to buy an investment property as quickly as possible. At this stage for you though, I feel there are a few other things that it would be great to get on top of before considering property ownership.

Firstly, and as you have mentioned, learning to save is a top priority. If you’re not used to putting money aside regularly, you’ll probably find it difficult to manage a mortgage that has to be paid each month. To get started, the easiest thing to do is to set up an online savings account with a bank other than your usual bank provider, that way it’ll make it a little harder to access your money! Next, set up an automatic transfer from your regular account into your savings account immediately following each pay day. We call this ‘paying yourself first’ and this will stop you from spending all of your paycheck before you know it, with nothing left over for savings.

I suggest that you make paying your car loan off a top priority too, so contact your lender and arrange to increase your monthly repayments (whatever you can afford, even if it’s just a little) and this will help you reach that goal faster and should also save you on interest. Although your parents probably aren’t charging you interest, you’ll feel good about paying them back I’m sure and there are two ways you could go about this. You could set up a transfer to them each pay cycle in order to pay them off slowly over time, or you could build up your savings account until you have enough saved to just pay them back in one lump sum.

The hardest thing is probably working out how much you can afford to save, so completing a quick budget will help, just write down how much you get paid each pay cycle and then list all of your expenses below. Hopefully you have something left over and that is what you can use to build your savings account.

Once you have repaid all of your debt, and managed to build a savings account, you’ll then be in a position to look at other investment options – that could be property, or even shares.

Author: Sarah Riegelhuth

Sarah is co-founder of Wealth Enhancers and League of Extraordinary Women, author of Get Rich Slow, blogger, speaker.

Disclaimer: Please note this article is of a general nature and should be used for informational and educational interest purposes only. Please seek professional advice before making any decisions in relation to your own personal circumstances.

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