What have puppies and money got in common? Join us as we take an irreverent look into the serious subject of savings and property investment.
How much savings do you need for Mortgage deposits? Most people think that knowing how much is the place to start BUT they would be wrong. The place to begin is to work out how much you CAN save. Knowing how much you can save gives you a framework with which to start your deposit savings. Look at it this way, if you knew you have to save $50k for example without knowing how long that would take or even if you have the capacity to do it, some people might not even try. Let’s be honest, $50k is a huge amount to be confronted with and just the size of that number may stop some people. So, we can see that deposit times and savings capacity are linked.
Think of it this way. If you know you can save $2000 a month then you will have that money in 25 months. Now you have a timeframe for when you will HAVE that money. In fact, with the miracle of compounding interest and the diversity of investment products available, it should be less than that. Saving a deposit becomes much more realistic.
The amount of money you can save will always be unique to your situation but that doesn’t mean you shouldn’t challenge yourself to achieve a better result than you thought possible. Is the amount you are saving now the maximum you can do or is it just what you end up with after you pay your expenses?
How do you know what you can really save?
The way to know is to identify where you are spending it. Then you can make decisions about what is important and those decisions end up as a budget. Your budget gives control and control is something that you need to make your money work for you so knowing how much deposit can be dealt with more easily.
You see, your money is like a puppy. If you don’t train it to obey your commands it will do what it wants. Putting a budget together is like having a set of commands that your puppy learns to respond to. A budget then, is like going to Puppy school. If you train your money, look after it and nurture it, it will grow.
Tip number one is to treat your money like a puppy
Puppies respond best to love and attention. They like to run around and play and they love you playing with them. When you first start saving, your money won’t grow quickly. That’s just because it’s small and it takes a while before it’s big enough for the returns to become significant.
That doesn’t mean you shouldn’t look for the best returns you can get for your money. Don’t ignore it because it’s small, pay attention to it and nurture it while it’s growing.
Tip number two – pay attention to your money while it’s still small
Puppies need to be fed every day. It’s a habit you quickly get into. Just like cleaning up after them, making sure they have fresh water. Making feeding time a habit makes sure that your puppy won’t miss a meal. Habits are good for savings too. Saving regularly means your money is growing and the longer you have it the more interest or return you will see. If you are regularly putting money into your account, don’t neglect this aspect of your saving.
Tip number three – feed your savings regularly
At some point you should see a Vet. Not because your puppy is sick but because it’s wise to have him checked by the Vet to see if you are treating him well. Is he getting the right amount of food, water and exercise? Your money shouldn’t be overlooked either. After a while of being in the habit of saving, growing your money, nurturing it and looking after it as best you can, it’s time to see the Vet. In your money’s case though, the vet is called a Financial Planner. A planner will talk to you about what you want to achieve and help you with your goals. Your planner will help you to keep your money healthy just like your Vet will keep your puppy healthy.
Tip number four – see a Financial Planner to keep your savings healthy and strong
Occasionally your puppy will have accidents. Some you can clean up, some will leave more permanent reminders unfortunately. The same may happen to you and your savings. You may be tempted to invest in something that sounded too good to be true and instead of a reward it leaves a pain that’s hard to ignore. Accidents are for learning. Sometimes we need to have an accident to see why something wasn’t the best course of action. Puppies learn fast and you can too. Stick to what works and understand that experience comes from making mistakes.
Tip number five – Accidents may happen but they can be a useful experience
One day you will notice that something has changed. Your puppy isn’t so small and clumsy anymore. When you go for a walk your puppy walks with you, just like you trained him to do and he doesn’t bark at every car, bird, postman or other dog anymore. He doesn’t weave madly back and forth in front of you while stopping to smell every power pole or letterbox along the street. Instead, he obeys your commands and for a moment you are surprised, not because he is so well behaved but because the time it took to get to this point has gone so fast.
One day you will go online and check your account, just like you do every month. This time you notice something has changed. As you scan the transaction list you’ll struggle to understand but then in a moment of clarity it dawns on you. You have reached your target. The money you dreamed of a mere two years ago is there, right in front of you. For a moment you are surprised, not because you got there but because the time it took to get to this point has gone so fast.
Our Financial Planners love helping people reach their investment deposit goals. Why not make an appointment to come in and have a chat today?