Four Steps to Financial Wellness for Urban Dwellers

Living in the city has always been more expensive, and it always will be. Making wise decisions about finances and making the best use of available resources must be everyone’s default. One good way to improve financial health is to generate active and passive income, in addition to having a strategic savings plan. ; Here’s how:

1. Ramp up Your Income with Rental Property

If you are in your 20s or early 30s with a job or business as a source of active income, improve your cash flow and balance sheet by investing money in real estate. Buying property to later sell or rent out for additional income very doable and is not as hard as some people think. Investing in real estate is especially advantageous for single individuals who have no dependents to take care of, simply because they have more money to invest. Married people with children would normally have more expenses, so setting aside money for equity and monthly amortizations is a challenge for an average income couple.

Getting a housing loan will be the standard option for most people. Look around for home loan companies that offer the lowest interest rates, review your income and expense statement, determine the amount of amortization you can raise monthly, and move on from there. Paying off the housing loan in 10 to 15 years, or even shorter, will help provide a person with a fully paid home upon retirement, or a property that can be rented out for passive income sometime in the future.

Sometimes, unexpected things happen and plans need to be changed. For example, what if you find yourself with a parent or a grandparent who lives alone and needs care due to their old age, a certain disability, or health condition? One solution could be is to help them by liquidating the home and using the proceeds for moving them to the so-called assisted living residences.

Better still, if you have a wide yard or lot area, another option is to buy modular granny flats that are specially designed so that the elderly can live in a safe, comfortable space that is within your reach. That way, you actually live in one family compound and you will be at arm’s length in case they need your help. Since this type of cabin needs a government permit to build, do not forget to classify it under a dependent person’s unit during the application period. This will help speed up the processing and approval of the building permit.

If the budget permits, also look for condominium projects and townhouses that are near the city center. The location of these types of residences will always have a market since people always need a place to stay in big cities where the jobs and business opportunities are plenty.

House in a village

2. Avoid High Ticket Liabilities for Now

To generate enough cash to invest in property, it is a good idea to avoid any high ticket expenses or liabilities for a certain period, say six months to a year. That amount of time is usually more than enough to save money for a condo or home down payment. One high-ticket expense is going on a luxury cruise or booking overseas trips complete with 5-star hotel accommodations. While it is good to reward yourself for all the hard work you do, make sure your long-term financial goals are not unnecessarily sacrificed by your vacation plans.

Another thing to avoid temporarily is the urge to buy a brand new sports car or anything that is too flashy and expensive. A car, or any vehicle for that matter, is generally considered a liability since the unit loses its market value from the very minute you take it out of the car dealership. While having a car is a necessity, buying a new one every year or two may not exactly be a good financial choice. First, invest in a business or financial instrument that will yield profits on a regular basis. Use that profit to pay for the car you want, instead of taking out the monthly payments from your personal income.

3. Strategic Savings

Another idea to consider is to start a strategic savings plan. It is called strategic because the benefit is not immediate but for one’s future. A good way to start is to enroll your payroll and have automatic savings. In short, every time money is deposited to you as payroll, a certain percentage is auto-debited and goes to another savings account. It is also strategic to prioritize paying-off debts with high interest. Saving for a retirement nest egg is also a given.

4. Build Money thru High Yield Bonds

Growing your money through high-interest bonds is a good way to invest since you are actually lending money to government. By having government securities, the risks are much less compared to those instruments offered by private entities. The key is to do the research and gather information about rates of return.

Investing in real estate to generate passive income in addition to your active income from a job or business; avoiding unnecessary large expenses; saving with a strategic mindset and specific goals; and leveraging on compound interest to grow money via safe financial instruments. These are easy and practical steps to financial wellness that anyone and everyone should implement. Building a better future for you and your loved ones is a goal worth aspiring for, and an achievement that will always be worth all the effort.

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