Start with the saving, not the restrictions

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I’m going to go through the three key areas that I really focused on when I first started investing in property. The things that allowed me to get my savings plan going together and really keep it consistent, and most importantly, not fall apart, which is actually some of the things that really go wrong when we look at how we build our savings plan to get that first or second or beyond that property.

So if we’re trying to prioritize these, it’s very, very often that we hear and say, restrictions is the most important. Now when we think of restrictions, what does that mean? It basically means lowering your expenses and minimizing them. Now some examples. We all hate the coffee one, right? Stop your coffees, reduce the coffees, the breakfasts that you have. And, “Look, if you can’t do it, you’re probably not going to be able to get into the property market.” That’s what we hear all the time. I tried it, I tried to restrict it, but for me, it just wasn’t sustainable. Because when I found myself restricting things, I then tried to save what was leftover. But then very quickly when I flipped that around and changed my priorities, I found my savings goals plus my restrictions were all being managed much better.

Let’s talk about what that looks like. Priority number one should always be income, and then with the income, how much of it you’re able to store. So, when I got to a sweet spot, I found that momentum gathering really quickly when it was at about 40% to 50% of your net income. Now, I promise you, if you start off with the income first, the storage second and then your restrictions, you’re going to be able to massage your restrictions better. And most importantly, rather than a goal of how much or little you should spend, you’ve already achieved a goal of saving 40% of your income.

Lets go into storage, what does storage even mean? Why not say savings? Because when I was saving, I found it, putting money aside, putting money aside, and I didn’t really have any goals to attach to it. I was simply saving to save. But when I started to think to myself, “Okay, I’m storing my money, because I know I’m going to invest it one day to hopefully multiply the money or generate passive income from it.” That is when I started using these simple words like, “Let’s store my money. Let’s store it, ’cause I’m going to use it one day.” It’s not just going to be saved, it’s going to be stored.

Now when does this need to happen? It needs to happen the day after, or if possible depending on how you get paid, the day of your payday. For me, that was fortnightly. So that meant at the end of every single fortnight, I was left with the restrictions. So this for me became much more automated, much easier to save, and much easier to tackle my goal of buying more real estate. When you’re now looking at the restrictions, you can either go, “Maybe I can have that extra coffee now, because what I’ve got left is all mine.” I’ve done the hard yards of saving first. Or maybe, “Hey, I was pretty good this week. Next week I can go out for a couple extra breakfasts.”

Now if you find yourselves getting too tight with the restrictions, and it’s just not working at the 40% margin, you can try to restrict yourself further however it may not be very sustainable. This is where It’s all about the income. You will need to ask yourself, how can I increase this income? Whether it be from your work or your investments, a side hustle, a second job, these are the type of things that we need to think about and what I wanted to leave you with today.