It’s the holiday season and this month can be a difficult one to continue our saving habit. Sometime we need to trick our minds to maximize our potential. Here is one trick I use to reduce spending and increase saving.
For many of us, it is easier to save money if there is a solid goal to shoot for. Saving money for the sake of a larger bank account is difficult to do and it’s not fun at all. For many of us, the best saving rate is achieved when we are saving for a house down payment.
You know the feeling if you are saving for a house right now. It’s the American dream to own a home and we can sacrifice many things to achieve that dream. When we were saving for our first home, we rarely ate out, went to shows, or spent much money on other optional gadgets.
We are now living in our own place and the incentive to save have lessened quite a bit. We are comfortable paying the monthly mortgage and have put away some savings. We still try to save money, but we go out to eat and spend more money on entertainment these days. Some people who paid off their mortgages have extra money to spend every month. It is too easy to spend extra money on fun stuff instead of saving/investing them.
Here is the trick I find very useful. Open your mind up to real estate investing and save for another property. This is one reason I recommend buying a house that is just enough for your current situation. If you are single, buy a 1 bedroom condo. If you are married with no kid, maybe buy a small 2 bedroom townhouse. When you outgrow the home in a few years, you can rent it out and buy a new home that fits better.
I find that when we are saving for a house, it is much easier to turn down frivolous purchases like the iPad or other gadgets. I’d rather see the savings grow large enough to hit that magic 20% number so I don’t have to pay PMI. A real estate investor always want to have liquidity in case the right opportunity comes a long. This is a great incentive to save and it works for me.
What about you? Do you have any good tricks to saving money? Everyone is different and your incentive is not the same as mine. I think buying a home is a very common dream for many Americans and it is one thing that trumps our consumerism culture.
photo credit: flickr – stevendepolo