Think it’s a pipe dream, putting half of your after-tax income toward investments?
Then you’re not thinking hard enough.
Investing in real estate costs money. The more money you can put aside to invest, the more you can potentially earn in returns. And ultimately, that’s the goal: creating financial freedom by making more money.
So if it takes money to make money in real estate investing, how can you set aside more money for your investments? Here are six tips to start living on 50% of your after-tax income.
6 Tips to Live on Half Your Income (& Invest the Rest!)
1. Your monthly budget must be based on four weeks’ pay, not your annual pay divided by 12.
Budgets don’t live on paper. They live or die in the real world, based on actual dollars coming in and going out.
In the real world, you get paid four weeks’ worth of paychecks in most months, and occasionally you receive six weeks’ worth of pay in a month (assuming you’re paid biweekly). Your budget needs to be based on what you can consistently expect to earn, not based on a theoretical fraction that exists only on paper.
On months when you do receive that third paycheck, congratulations! You can shunt that entire paycheck into your savings account. (What, you thought I’d tell you to go buy another trendy gadget or a 15th pair of shoes to almost-never wear?)