For most people, the coronavirus pandemic served as a great financial eye-opener. This made us realize that even if riches can’t buy happiness, money is crucial for a more comfortable life. With more people losing their jobs and suffering financially during the crisis, it only makes sense to start rethinking how we handle our finances.
Building wealth is one thing most people want to achieve. But the best way to achieve this is by focusing on the things you can currently control. Investing and committing to downsizing can be a great way in establishing wealth.
Here’s how successful people managed to save up enough cash to grow their wealth through downsizing.
Move to a New Home
More often than not, merely moving to a new house won’t be enough to reduce your expenses. There is no point in moving to a new location if the overall costs and expenses are almost the same as in your old home. Downsizing can mean moving to a smaller, lower priced home in the same city or relocating to the suburbs.
Before you make the decision, consider your finances, your lifestyle, and how much mortgage you can comfortably afford each month, along with the other costs. You can use this opportunity to apply for a home loan in buying a duplex. This allows you to own your new home and rent out the other unit to gain passive income and possibly acquire a huge part of your monthly home loan payment from their rent.
Cut Down Your Clutter and Expenses
Moving to a new home can be the best opportunity to trim down your belongings. Choose to get rid of the items you no longer need, use, and want. Remember that there is really no need for you to own multiple copies of your belongings especially if your living space is a lot smaller.
Choose to sell your extra belonging and gain extra cash. You can opt to open a garage sale or sell them online. Who knows? You can even use this opportunity to open your own thrift store.
Aside from your clutter, find ways to trim your expenses. Take a look at your recurring expenses and see which areas you spend most of your hard-earned money on. You will be surprised just how much money you waste on things you don’t really need or even use.
For example, that video streaming subscription you pay for each month. This can be a membership you never even use or forgot you’re paying for. A careful review of your expenses and reallocating your budget wisely can help you grow your savings in no time.
Simplify Your Finances
Are you still manually paying your bills? Do you only save how much is left each month? Then now is a crucial time to start automating your finances.
Start by using an online service to pay your monthly bills like your mortgage, utility bills, and credit card payments. Set up a portion of your income and schedule a recurring deposit to a designated savings account. Whatever is left on your income after your savings and monthly payments, that is what you can use for your wants or investments.
If you have multiple bank accounts, limit them to a single savings and checking account. Use your checking account for your paycheck. Your savings account should be high-yield savings account so you can earn more interest as your savings grow.
The same goes for your multiple credit cards. It is best to only have one or two credit cards to make it easier for you to track your debt. Consolidate your credit card debts into one, start paying them off and consider living a credit-card-free life.
Streamline Your Brand
Do you own and run a business? Sometimes, it is best to keep the business small. This makes it easier to maintain and operate.
Unless you have plans to turn your humble small business into a corporation, you can turn to strategies that will enable you to earn more profit without expanding or growing the business. You can do this by:
- Streamlining your operations
- Investing in the right equipment, tools and
- Hiring the right employees
- Engaging old clients and your target audiences
- Know when to outsource and hire professional services
- Integrating online and offline marketing
- Filing taxes electronically
- Hiring a temporary Chief of Finance to make the company more profitable
How you make financial decisions can affect how you live, work, save, and grow your wealth. Choosing to downsize is nowhere easy. But this can be your first step towards wealth acquisition. You can start with downsizing your home, streamlining your finances and business, and cutting down your expenses.