9 Simple Steps to Buying Your First Home

If you want first time home buyer tips, you’ve come to the right place.

Buying your first home is an exciting time, but the financial lingo can get overwhelming. Fear not, though. After reading this guide, you’ll be well on your way to becoming a first time homeowner.

After all, people become first time homeowners every day, and you can absolutely learn all of the information necessary to be a part of that club. In fact, I think you’ll find that everything is more straightforward than it seems.

To help you in the process, below is a comprehensive guide for hopeful first time homeowners. It lists nine steps to take so you can eventually buy your first home successfully. You’ll learn how much house you can afford, how to get pre-approved for a loan, how to find a buyer’s agent, and even tips for ensuring you’re able to keep your home long after moving in.

Let’s get started.

TABLE OF CONTENTS

Step 1: How Should I Financially Prepare for Buying a House?

Before you even consider where you want to live and how much house you can afford, you should financially prepare for buying a house first. If you’re a first time home buyer with bad credit, this is the most important step you can take in this process. This section shows you how.

Pull Your Credit Report

As a first time home buyer with bad credit or good credit, you’ll want to pull your own credit report to know where you stand.

You can look at your credit report from each of the three main credit bureaus for free once a year. Go to AnnualCreditReport.com, fill out the required information to confirm your identity, and then take a look at your report. The main issues you want to fix are adverse accounts. You’ll see those listed near the top of the credit report.

Even if you think your credit history is squeaky clean, check your credit report anyway. There could be a mistake on it. Once, I found an adverse account in collections on my credit report from the public library for not returning an audiobook I borrowed for a long drive.

So, even silly, seemingly inconsequential mistakes could be on there. Lenders don’t like to see borrowers with adverse accounts or any accounts in collections, so be sure to resolve those before talking to a bank about a home loan. An easy way to challenge the information on your credit report is through a service like Credit Karma.

Improve Your Credit Score

Your credit report also provides valuable information that can help you improve your credit score. Here are the factors that affect your credit score:

Payment History	35%
Amounts Owed	30%
Length of Credit History	15%
Credit Mix	10%
New Credit	10%

With this in mind, you now know that your payment history plays a huge role in your credit score. This is the record of all the bills you’ve paid on time, and banks love it when you pay on time because it means they will likely get paid on time if they loan you money.

If you have late payments on your credit report, the best plan is to pay all your bills on time, every time from now into the future. Your late payments over 30 days will remain on your credit report for 7 years, so you can’t go back and erase those. However, you can ensure all your recent bills show current payments with accounts in good standing.

Be prepared for your potential lender to ask about any late payments. I had a late payment that was 5 years old on my credit report, and every lender I talked to about my first home loan asked me about it. I explained that it was an oversight and as evidenced by the rest of my record, not typical of how I handle money. They seemed satisfied with that response, and we were able to get a home loan without too many problems. So, even if you have late payments on your credit report, that doesn’t mean that you won’t get a home loan.

Don’t Take Out New Loans

Once you start the home buying process, avoid taking out new loans. I know part of your credit score relies on a good account mix, but this is not the time to add new accounts to your report.  Taking on new loans, even if you can technically afford them, can affect your credit score and your debt-to-income ratio, or DTI.

So while you’re in the middle of checking your credit, getting pre-approved, and seeing how much home you can afford, you are better off not taking out any new car loans or applying for new credit cards.

Eliminate High-Interest Debt

Another quick way to improve your credit score is to pay down any outstanding debts you may have. The amount of money you owe in relation to your credit limits makes up 30% of your credit score. If you’re maxing out your credit cards and using up most of your available credit, you’ll have a lower score. So, before applying to lenders for a home loan, try to pay off as much consumer debt as possible to improve your score.

If you need to find a way to get extra money so you can pay down debt, either cut back on your expenses or earn more money. If you feel like you’ve cut back on as many expenses as you can, the next step is to pick up a side gig to make more cash. Here are a few examples of ways you can earn extra money so you can become a homeowner sooner:

• Rent out a room on Airbnb.
• Deliver groceries with Instacart.
• Deliver take out with Uber Eats.
• Start an online business.

Set a Monthly Savings Goal

Once you’ve pulled your credit report, repaired adverse accounts, and worked hard to pay down outstanding debt, it’s time to set monthly savings goals. You’ll need a large down payment, preferably 20% of your home purchase price, and enough money for closing costs in order to buy a house.

In order to stay motivated to save money every month, put a picture of your dream house on the fridge. Set reminders. Work together with your spouse as accountability partners so you can reach your goal of homeownership together. If you’re single and buying a home, get accountability through your parents, coworkers, or friends. Usually, a combination of eliminating unnecessary spending and finding ways to increase your income can help increase your monthly savings goals.

As far as where to keep your monthly savings goal, I recommend depositing it in a high yield savings account (as opposed to investing it). That way, the money is tucked away earning some interest while you save to buy your home. Investing is a good idea for long-term goals, but for short-term goals, like buying a house within a year, a high yield savings account is preferable to the stock market.

See Also: 12 Ways Renters Can Save for a Down Payment

Step 2: How Much House Can I Afford?

Banks often approve people for a more expensive house than they can afford. So, the most important lesson here is that you are the one who should decide what you can afford (not the bank.) So, how can you figure that out? Use the rules below.

28% Rule for Mortgage Payments

The 28% percent rule means that your mortgage payment should be 28% of your gross monthly income or less. Some financial experts actually recommend that it should be 25% of your monthly income or less.

Keep in mind that your total income is your gross income for both spouses combined (if you’re buying a home with a spouse.) Gross income is your income before taxes, health insurance, and other expenses get deducted from your paycheck. Net income is your income after those expenses have been taken out.

If you live in a higher cost of living area like the New York city metropolitan area or in parts of California, this percentage might be higher. Keep in mind, though, that the goal is to not overextend yourself. By sticking to the 28% rule, you will have a house payment that’s manageable with your gross income.

32% Rule for Total Housing Costs

The 28% rule mentioned above applies just to mortgage payments, but there are more costs to consider when buying a home. For example, you’ll have to pay homeowner’s insurance, and if you put down less than 20% in a down payment, you’ll likely have to pay for private mortgage insurance too.

The 32% rule says that all of these payments combined – mortgage, PMI, and homeowner’s insurance – should not exceed 32% of your gross income.

40% Rule for Total Monthly Debt Payments

Lastly, if you have other debts you’ll still be paying as a homeowner, like student loan debt, credit card debt, or a car loan, stick to the 40% rule. This rule says that all of your debt payments in total, including your house payment, should be no more than 40% of your total income.

While these percentage rules aren’t set in stone, they provide good guidelines to ensure you can afford not only your mortgage payment but your other bills too. That’s why it’s so important to have an intimate understanding of your finances before you even look for your first house to buy.

Buying a home isn’t a quick process, but it is a worthwhile one. If you can get your finances organized, manage your debt, and improve your credit score, you’ll be ready to move on to step 3, deciding where you want to live.

Step 3: Where Do I Want to Live?

One of the first questions you need to ask yourself when buying a home is, “Where do I want to live?” It might seem like you already have the answer or even know the exact neighborhood you prefer. Yet, it’s important to keep an open mind when you’re buying your first home.

What to Know About Desirable Neighborhoods

Sometimes, highly desirable neighborhoods also have high markups. You might be surprised to find an equally beautiful neighborhood that’s up and coming just 15 or 20 minutes away from where you think you want to live.

If you’re set on living in a certain neighborhood, consider buying the least expensive house in the neighborhood. If you have DIY skills or are willing to invest more in your home over time, you could increase the value of an older home simply by updating it.

Consider School Districts

If you have children, carefully research school districts. You don’t want to think the house you’re buying is squarely in the district you want only to realize later that it isn’t. Also, every school district is different. Some allow you to go to any school within the district while others only allow you to go to the school closest to your specific neighborhood. It’s important to know that information ahead of time.

If you’re a newly married couple and hope to have kids a few years into the future, consider homes that are further out from your desired area. Specific neighborhoods near good school districts might be highly competitive for a first time home buyer.

If you don’t have kids yet, it might be wise to buy a less expensive home, build equity, and then move into a  specific district once you have a family. After all, kids don’t start kindergarten until they’re around age 5.

How Long Do You Want to Live There?

Buying and selling homes can get expensive. There are closing costs, real estate agent fees, and moving costs to consider. It’s not something you should do every year or even every few years because of these expenses. Ideally, strive to live in a home for at least five years before you consider selling it. This allows your home time to appreciate in value before you sell.

So, when you’re thinking about where to live, consider how long you want to live there and what your future family might look like in that home as well.

Step 4: How Much Do I Need for a Down Payment?

Saving for a down payment is an important part of the home buying process. It takes discipline to save several thousand dollars for this purpose, and the more you save, the bigger percentage of your home you will own. A first time home buyer down payment isn’t any different from an experienced home buyer down payment.

Here’s what you need to know about the first time home buyer down payment.

Most Lenders Prefer 20%

If you want to qualify for a conventional mortgage, lenders prefer that you put 20% down on a home. So, that means if the house you want is $200,000, you should save $40,000 for your down payment. Keep in mind your down payment doesn’t cover other costs associated with closing on your home. You’ll still need to save additional money for the inspection, closing costs, and realtor fees.

Put as Little as 3.5% Down with an FHA Loan

First time home buyer loans with zero down are almost unheard of, but the FHA is probably the closest you’ll get toward your goal if you can’t afford much.

If the thought of saving 20% down for a home overwhelms you, there are other mortgage options. If you qualify for an FHA Loan, which is a common option for a first time home buyer loan, you can put down as little as 3.5% to purchase your home. Keep in mind, though, if you only put down 3.5%, you might be subject to a higher interest rate as well as PMI.

PMI

PMI, also known as private mortgage insurance, is an additional bill you have to pay if you put down less than 20% on a home. This isn’t money that goes towards paying down your mortgage loan, though. It is an insurance payment that you make. Because you put down less than 20% on your home, the bank considers you a riskier borrower. The insurance protects them should you ever foreclose on your home.

VA Loans

If you served in the military, you might be eligible for a VA loan. VA loans are a different type of loan because you can buy a home for $0 down without having to pay PMI. The reason is that a portion of each VA loan is backed by the federal government. There are fees and potentially higher interest rates with a VA loan, though, so it’s important to compare the pros and cons of a VA loan versus a conventional mortgage before deciding which is best for you.

First Time Home Buyer Programs

Because this is your first home, it’s important to see if you qualify for first time home buyer programs. I already mentioned the FHA loan program and the VA loan program above, but there are others, like the HUD Good Next Door Neighbor program, which helps teachers, firefighters, police officers, and other personnel buy their first homes.

There are also other first time home buyer benefits, like grants, that you can apply for. You can find first time home buyer grants by talking to your real estate agent or brokers, because many of these grants are state-specific or income-specific. You can also look online to see what grants might be available to you in your area.

Don’t Forget About Closing Costs

As mentioned, you’ll also need to save for closing costs. Some buyers do ask the seller to pay for a part or all of closing costs during the sale, but you shouldn’t count on this. Instead, speak with your real estate agent to get an estimate of closing costs. By law, they are required to give you the exact amount you have to pay in closing costs a few days before your closing date.

Beware of Wire Fraud

In the days leading up to your closing date, you’ll get information about where to wire your money for closing. Over the past few years, there have been numerous reports of wire fraud. Hackers can break into your real estate agent’s email, and instruct you to send your money to a completely different account. Once you wire money to the wrong account, it’s very difficult to recover it. Make sure to call your real estate agent before wiring to confirm the correct account numbers over the phone before sending it.

Tax Credits and Deductions

In your research of first time home buyer benefits, you might come across information on first time home buyer tax credits. That’s usually referring to the federal tax buyer credit that President Obama created during the 2008 recession and housing crisis. Unfortunately, that tax credit is not available anymore to new homeowners.

However, you can deduct the interest you pay on your mortgage on your taxes as well as several other costs, like moving costs. Once you become a homeowner, it’s important to research any change in tax law as it relates to owning a home or consult an accountant to ensure you’re getting the biggest tax benefit possible after buying a home.

Step 5: Get Pre-Approved for a Loan

As evidenced by this list, it might take some time to financially prepare to buy your first home. It could take a few months to pay down debt, save money for your down payment, and more. However, this is time well spent because you’re much more likely to get approved for a home loan if you have a high credit score, ample savings for a down payment, and know exactly how much house you can afford. Also, the better your credit outlook, the lower interest rate you’ll get most likely.

Pre-Qualified vs. Pre-Approved

You might have heard two terms when it comes to getting initial bank approval for a home loan, pre-qualification and pre-approval.

Pre-qualification is where you submit your financial information to a lender, either over the phone or online, and they can give you an approximation of the price of a home you can afford based on your information or credit-worthiness. This is not a guarantee for a loan; it’s more of a snapshot to let you know where you stand.

If you do not get pre-qualified based on your financials, you know that you have to go back, work on your credit, increase your down payment fund, and more. If you do get pre-qualified, you can feel comfortable beginning your search for a buyer’s agent. Eventually, you will need to get pre-approved which is different from pre-qualification.

Requirements for Pre-Approval

Pre-approval is more official than pre-qualification. You’ll be submitting actual documentation to the bank to confirm the numbers you gave them during pre-qualification are accurate.

Here is a list of documents your lender will likely request during pre-approval.

• Proof of Income
• Proof of Assets
• Employment Verification
• Identification Documents
• Social Security Numbers to Run Credit

Your lender will take all of these documents, verify everything, and then they might ask you a few questions. Sometimes they’ll ask you to explain past credit mistakes or ask you to show past employment data. If you’re self-employed like I am, you will likely have to show two years of profit and loss statements from your business. If you haven’t been in business for two years yet, you might have to delay the homeownership process until you can prove you have a steady income.

After your lender reviews these documents, you’ll get an official pre-approval letter. This is important because it shows you’re serious about homeownership. Additionally, some listing agents might not let buyers view a home without this pre-approval letter. This helps them not to waste time showing a house to a potential buyer who might be denied a loan after making an offer.

See Also: 10 Home Buying Mistakes That Could Cost You Thousands 

Step 6: Find a Buyer’s Agent

Finding a good real estate agent is integral to buying a home. You want someone with experience, patience, and a willingness to help you through this process.

Keep in mind that not all real estate agents are Realtors. A Realtor is a special designation that real estate agents can get for being members of the National Association of Realtors, which has a strict code of ethics they must abide by. Here are a few ways you can find a real estate agent or Realtor.

Word of Mouth

Start your search by asking friends and family members for recommendations of real estate agents in your area. Listen to why they recommend them. Is it because they got them a good deal? Is it because they carefully explained the process? You want to find an agent who will help you through this process since it’s new to you.

Online Search

Some of the most popular websites to find real estate agents are Realtor.com, Redfin, and Zillow. Make sure you read all the reviews to make sure the person you want to work with is responsive and knowledgeable about your area.

Buyer’s Agents vs. Listing Agents

Again, when you’re buying your first home, you’ll be looking for a buyer’s agent. You might see listing agents come up in your search. Although real estate agents can do both, sometimes they specialize in one or the other. A listing agent is an agent who lists your home for sale. They’ll be responsible for helping you price the home, inviting buyer’s agents to come to open houses, and more. A buyer’s agent, on the other hand, works just with you – the buyer – to help you through the whole home buying process.

Step 7: Find a Home You Love

Now that you’re pre-approved for a loan and have a buyers agent, it’s time for the fun part: finding a home you love. A simple first step would be to start going to open houses in the neighborhoods you love or looking online.

Research Homes Online

Your real estate agent might give you access to a private portal that shows you homes that match the criteria you want. You can continuously refresh this portal to find the newest homes for sale in your desired neighborhoods. This is especially beneficial if you’re in a competitive housing market where homes go quickly.

Visit a Lot of Homes

Your buyer’s agent will probably ask you for a list of the things you want in a home. You might not be able to get everything on your list, but it will give your agent a good idea of what you’re looking for.

As you visit homes, you might see other things you want or realize that you don’t actually need a fireplace or a large backyard like you thought. The more homes you visit, the more you’ll discover the right type of home for you. Keep the communication with your real estate agent friendly and open, so they know if your preferences change.

See Beyond the Decor

When you visit an open house, try not to get distracted by the decor. You shouldn’t walk into a living room and say, “Oh I love the furniture,” because the furniture is not yours. Instead, pay attention to the things beyond the decor, like the high ceiling, multiple windows, and more.

If you are adept at seeing beyond decor, you could also get a great deal on a home. For example, you might tour a nice, well-built home with the layout you want, but it’s full of floral wallpaper. Many buyers might be turned away by all the work that removing wallpaper entails, but if you can see beyond it, you could buy the home perhaps for a good price.

Only Visit Homes In Your Price Range

Make it clear to your real estate agent ahead of time that you only want to visit homes in your price range. If you can’t find a home you like, your agent might try to convince you to increase your budget by $10,000-$20,000 so you can get certain features you want in a home.

Our real estate agent tried to get us to agree to this because we wanted a home with at least two bathrooms. At the end of the day, though, we couldn’t find one that fit into our price range, so we’re currently in a home with one bathroom. I’m glad we stayed within budget because it helps our monthly budget stay manageable. In the future, we can always upgrade to a home with more bathrooms.

So, it’s important to stick to your budget, even if you know adding $10,000 more to it will only be a few dollars more per month over a 30-year loan. You want your home to be an asset that grows. If you start out with something you can’t afford, it could become a hindrance. Remember, you can always save your money to update a part of your home or make an addition over time.

Step 8: Submit an Offer

Submitting an offer as a first time home buyer can be an anxiety-ridden experience, especially in a competitive market. This is where your buyer’s agent can be most helpful.

When my husband and I bought our first home, our buyer’s agent told us there were already several offers on the house.

We’d already lost two homes in one week, and we didn’t want to lose this one. So, we went in with a very strong offer of $5,000 over the asking price. We also agreed to let the seller live in the home for 30 days, even though it was inconvenient for us. We included a photo of our family and a note about it being our first home, and believe it or not, we were selected out of five different offers.

I’m not advising you to go $5,000 over asking price, but I am advising to know your market well. If you keep making offers on homes that are being rejected, talk to your agent about ways to avoid that in the future. Be flexible and know that you might not get the home that you consider your dream home. However, there are many beautiful homes on the market, and the right one for you is out there!

If Your Offer is Accepted, the Escrow Process Begins

Once your offer is accepted, the escrow process begins. This means that you won’t get the keys to the house the day after you buy it. It can take 1-2 months to go from an accepted offer to walking over the threshold of your first home.

At the beginning of the escrow process, the buyer will deposit what’s called earnest money into the escrow account, a sign of good faith while the escrow agent reviews all documents related to the sale.

Get a Home Inspection

During the escrow process, you’ll also arrange a home inspection. If something in the house needs to be updated or repaired, you’ll negotiate those repairs during this time period. You’ll also arrange for an appraisal of the house and finalize your financing during this time period.

Keep in mind your lender will not finance a house for more than it’s worth, so if your home appraisal comes back as less than the agreed upon purchase price, you’ll have even more negotiating to do with your seller.

Sometimes, if buyers really want a house, they’ll pay the difference between what a home is worth and their offer. This is not usually recommended, though, especially if you only put 0% down on your home. You don’t want to owe more on your home than it’s worth.

Protect Your Home with Insurance

Lastly, you should get insurance on your home before moving in. In order to save money on home insurance, get multiple quotes from many different insurance companies. Keep in mind that you might get the best savings by using a company you already do business with for your car insurance. Insurance companies like it when you bundle insurance because it means you’re being loyal to them for many different types of insurance.

Step 9: Move In!

Congratulations! You’ve reached the 9th and final step here. You get to move in! Go ahead, break out the dance moves. You’ve earned it.

Because you’ve worked hard as a first time home buyer to assess your finances and buy a house you can afford, here are some tips for ensuring you continue to stay in your home for many years to come.

Have a Robust Emergency Fund

Homeowners should have an emergency fund with at least 3-6 months of living expenses in it. This fund will give you incredible peace of mind. If you lose your job unexpectedly, you now have 3-6 months to find a new job without worrying about losing your home. You can also use the money in this emergency fund for major house repairs you weren’t expecting.

Keep in mind that home repairs don’t include a swanky new bar in your basement. This is for when a pipe bursts or you need to replace your entire hot water heater.

If you are looking for a high interest bank to park your emergency savings (while still providing you easy access to your money), check out our roundup of best savings accounts.

Maintain It Often

I’m looking around my living room right now, and I see plenty of areas that need improvement and paint touch ups. The thing is, I know I need to keep maintenance up over time. I don’t want small issues to turn into big repairs. And, I don’t want to spend thousands of dollars fixing up my house when it’s time to sell.

Properly maintaining your home over time ensures that it can grow in value and by extension, grow your net worth over time.

Avoid Overextending Yourself

Your home is one of the biggest purchases you’ll ever make. And, once you’ve been living there a few years, it’s tempting to use a home equity line of credit to upgrade your kitchen or your bathrooms. However, try to avoid overextending yourself. Protect your investment in your home and be careful about leveraging it to borrow money. Your biggest goal should be to remain a homeowner for as long as possible. Don’t place buying new furniture above paying your mortgage bill. Always protect this big investment by caring for it and ensuring you always pay your mortgage bill on time.

Ultimately, if you stay focused, always make prompt payments, and continue to maintain your home, you’ll be well on your way to building long term wealth through home ownershi – even as a first time home buyer.

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23 Simple Ways to Save Money Fast (and Actually Build Wealth)

Stop me if you’ve ever been in this situation before… wondering how to save money and build real wealth.

You’re at the kitchen table with a stack of bills next to you, armed nothing with a pen and a calculator, you attempt to make sense out of last month’s finances. Much to your chagrin though, you find out that after taking all the expenses into account, you’re not left with much money.

You need to learn how to save money—more money so that you’re actually feeling the impact in your bank account.

So, you pull out that expenses spreadsheet again and start seeing where you can start cutting costs and begin looking   for clever ways to save money in your budget each month.

Well, first and foremost… know that you’re not alone. This situation of needing to learn how to save money, is one that millions of people around the world find themselves in every single day.

As an entrepreneur, especially if you’re bootstrapping your business idea or starting a blog you hope to grow into a full-time business, it’s a constant battle to keep your finances in order. To find that right balance between investing enough money into your business so it actually grows, while still having enough money left over so you can pay your rent, buy groceries, and stay afloat.

As I mentioned earlier, the instinctual reaction to financial woes is to simply start cutting things out of your life. Which usually means taking a pass on that coffee in the morning, staying in for dinner, or making the choice to start cutting your own hair.

And I want to dispel a common myth. You don’t have to live an undesirable lifestyle in order to save money.

The problem with this kind of penny-pinching you’re doing when you skip the daily coffee, is that not only are you constantly demoralizing yourself by cutting out the little luxuries that make life worth living, but you’re saving pennies-on-a-dollar when you can be saving actual dollars.

That doesn’t mean that I’m telling you not to be frugal though. The wealthiest people in the world only got to where they are through smart money management.

What I am telling you however, is that there are better ways out there to save money.

Which is why I’ve put together this list today, to show you some of the most clever ways I’ve discovered to save money every month.

23 Simple Ways to Save Money Fast (and Build Wealth)

Saving money doesn’t have to be about denying yourself all the pleasures in life and resolving to live like a monk. After all, entrepreneurship is all about building a lifestyle you actually want.

Obviously no one tip is going to save you thousands of dollars, but a combination of even a few of them is going to go a long way in helping you save money that you can re-invest into growing your business as fast as possible.

If I’ve missed out on any good ways to save money, then please share your own money saving ideas in the comments below! And if you’re ready to start a business, join my free course, Find a Profitable Business Idea.

Here are my picks for the best ways to save money that you can do right now.

1. Embrace the 80/20 Rule

The mindset you need to get into immediately with your finances, and as an entrepreneur in general, is the 80/20 rule.

In case you’re unaware the 80/20 rule, otherwise known as the Pareto Principle, states that 80% of your results come form 20% of your efforts. Once you’re aware of this you’re going to see it popping up over and over again in your life.

Take a look at your latest grocery receipt for example, you’re going to find that roughly 80% of the total bill comes from only 20% of the items you’ve bought. On an even grander scale you’ll probably find that 80% of your budget goes to the same things over and over again.

Whereas 20% of what you spend goes towards those one-off purchases, those little things like lattes and avocado smashes.

So what’s the point I’m trying to make here? That the key to saving money isn’t by focusing on the 20% but the 80%.

Take a look at the things that take up 80% of your budget, those same expenses you visit over and over again. Are there any costs that can be cut from there first? Can you get anything cheaper? Why do you keep revisiting those same items?

Force yourself to look at the bigger picture here.

2. Automate Your Bills, Savings and Finances

A major reason why we don’t save money as effectively we can be is that, most of the time, we have no idea how much money we should be saving in the first place.

Our brains are inherently wired to fight us every step of the way when it comes to saving money. Firstly by making finances incredibly boring to the average person, and secondly by constantly trying to trick you into believing that you have more money than you actually do.

Which is why you should absolutely start automating your finances.

Instead of always trying to guess how much of your paycheck should go into your savings and bills, you can easily set up an automated process where everything is taken care of for you. By automating your finances you can save yourself from all the headaches and stress that usually comes with money management.

Streamline the whole process by having all your bills and expenses taken care of the same day as your paycheck arrives. That way you can be safe in knowing that your bills looked after, your savings account is getting topped up, and investments like your 401k are being handled, all without lifting a finger.

The best part is that any money that’s left over is your spending money that you can use completely guilt-free.

3. Negotiate Your Bills Down

No other skill in the world will save you as much money, or be as valuable to you later in life, as the power of negotiation.

On the larger scale the art of negotiation can save you millions of dollars and net you prize deals to further grow your business. On an everyday level, learning how to negotiate can save immediately save you thousands of dollars in the long run.

Right now you can easily pick up the phone and call your service providers, doesn’t matter if it’s for your cell phone or your car insurance, and simply ask them if they can give you a better deal.

A 5-10 minute conversation can be all you need to immediately save money and see a reduction on your next month’s bill.

You can immediately start your education on negotiation with bestselling book The Yes Bookby Clive Rich, and find out how you can practice the art of negotiation—as a way to save money—no matter where you are.

4. Get at Least Three Quotes Before You Buy

A great tactic for negotiating that everyone should start practicing right now, is to gather at least three quotes from three different suppliers before making a final decision on any major purchase—that even goes for things like your internet bill if you’re taking the right work from home jobs or full-time remote jobs.

This practically guarantees that you save money on major purchases.

Remember that everyone wants your business, but you have to give them a reason to give you a better price, thus often ending with a meaningful way to save money on individual purchases.

The easiest way to do that is to let sales reps know that you’re acquiring quotes from other suppliers and that you’ll be going with the best one available (because you’re trying to save money here, remember?).

This simple strategy to save money will drive most suppliers to offer you a competitive price so they can have your business—all for the cost of asking a single question.

5. Share Memberships, Subscriptions, Products and Tools

If there’s a particular online business course or business tool that you have your eye on, but can’t justify the additional expense to purchase it, save money by finding a friend who’s already using the product or by asking another friend to share the cost with you.

Whether it’s the Adobe Creative Suite, or another tool that could stand to make a meaningful difference in the success of your business, this is a great tactic to save money. Just share your login credentials with each other and you’ll both get access to the same materials for half the cost.

6. Buy in Bulk

This one’s pretty easy, if you have any items that you use frequently, then look into seeing if you can purchase them in bulk and get a discount from a local supplier.

Oftentimes you’ll find that you’ll get a much better per-unit price, and you’ll rarely have to worry about running out of that item again, making this a fairly easy way to potentially save money on essentials every month.

7. Pack a Lunch

You’ve probably heard this over and over again, but the reason why this tip to save money is so popular, is because it really works.

Taking a little time to pack a lunch before you head off to work, or just choosing to not eat out, is a great way to save money. You can even take it a step further and plan out your meals at the start of every week so that you know exactly what it is you need to buy while grocery shopping.

You can easily save yourself thousands of dollars annually by following this one tip to save money.

8. Cancel Under-Utilized Subscriptions

Chances are that if you have a gym membership you’re currently not using it.

In fact it’s been found that 80% of American don’t use their gym memberships, and most gyms make the bulk of their profits from redundant memberships. For most Americans a gym membership is one of many redundant subscriptions that they should throw away.

Naturally there are going to be some services that you use on a constant basis that justify a monthly payment. But the reality is that, despite being incredibly convenient, we’re not getting that much value out of most of our subscription services.

Take a look at what services you’re currently signed up to, and if there is anything that you don’t use on a regular basis then cut the cord.

9. Cut the Landline

While we may all have fond memories of yelling at our siblings to stop using the phone because you’re using the internet.

Thankfully in the past few years technology has grown by leaps and bounds, to the point where we’re truly living in a wireless world. That being said, it’s time to cut the landline. Unless you happen to be one of the handful of people in the world who still use their landline, home phones almost feel like a relic of the past these days.

On average, the cost for a landline is around $20 per household. Meaning that, on average, you can immediately save money—up to $240 a year just by removing your house phone.

10. Invest Your Time (and Money) into Big Wins

More than money an entrepreneur’s greatest resource is time.

If you want to save money and build your wealth as fast as possible then you accept the fact the majority of what you’re doing is just a waste of your precious time. Time that could be spent landing more sales and clients, furthering your ways to make money online, or learning new business skills.

Most people try to save money by cutting back on their expenses, whether that’s denying themselves the odd latte or attempting to do a job themselves. While admirable, the problem with this logic is that all you’ve succeed in doing is devaluing your own time.

The few hours you spent learning how to unclog that kitchen sink yourself might have saved you a couple hundred dollars. However, how much more money could you have earned if you had spent that time working on your business instead?

As an entrepreneur you should be focused not on how much money you can save with your time, but how much money you can earn. Don’t lose sight of the bigger picture by trying to get a bigger slice of the pie, when you can be making yourself a bigger pie in the long run.

11. Work Out of a Library or Co-Working Space

If you’re just looking for a place to work then instead of shelling out thousands of dollars to rent some office space just head down to your local library.

These days most modern libraries will freely provide you with everything you need to get to work, from free internet, quiet rooms, and other amenities for you to use. Plus, lest we forget, you’ll quite literally be surrounded by thousands of books covering virtually every topic known to man that you can use for free to your own delight.

However, depending on your own business’s needs, then you can use a tool like Coworker to find yourself a co-working space near you. For a membership fee you can get access to conference rooms, high-speed internet, and the chance to meet like-minded people by joining a community of local entrepreneurs.

12. Hire a Virtual Assistant

Let’s say, for the moment, that your time is worth $60 an hour.

Knowing that, how willing are you now to spend time on a $10 task?

No matter what stage your business is in there are bound to be repetitive or time-consuming administrative tasks that can be done by someone else. While it is tempting to keep costs low, especially in the early stages, by doing everything yourself.

The drawback is that the time spent on these low-energy tasks could be better spent doing something else. Virtual assistants are an incredibly cheap and effective way for you to outsource these tasks to someone else, giving you back your time.

Renowned entrepreneurs like Tim Ferriss and John Lee Dumas have built their respective empires by employing up to dozens of virtual assistants. You can start looking into hiring your own virtual assistant with this 5-step guide to The Secrets to Finding, Training, and Managing Great Virtual Assistants by my good friend, Jonathan Chan.

13. Take on a Protege and Buy Back More of Your Time

If your business has grown to the point where you can start taking on regular employees, you should definitely consider the idea of bringing an intern on board.

In exchange for one-on-one coaching and work experience, you can gain a motivated and passionate individual on your team for a fraction of the cost of an employee.

Finding the right intern for you can be as easy as asking your friends and family if they know anyone that’s looking for experience in your industry. Otherwise you can always go to your local college for any potential hires.

Most colleges will already have an internship program that your business can be a part of, although each one will have their own individual expectations and requirements. You can also use services like InternQueen and WayUp to find potential interns both online and in your area.

Just remember that your intern will likely be someone who is either in the midst of completing their studies, or has only recently graduated. Which means that you’ll need to put aside some time train your intern to the necessary skill and experience level, otherwise you’ll just end up shooting yourself in the foot.

Just like with any new potential hire, be realistic about your expectations about your intern in order to get the most value out of them. At the very least the processing of finding and hiring an intern will be a great opportunity for you to do a stress test on whether or not you and your business are ready to bring on employees.

14. Start Loving Sales (and Sell More)

When I say that you should start loving sales that doesn’t mean that you should be jumping on top of every sale that comes your way. The best way to take advantage of sales is to create a list of things that you actually want to buy. From the simple things like grocery items, and SaaS’s that you have your eye on, to gifts for family and friends when the holiday season rolls around. That way you make sure that you’re actually taking advantage of sales, instead of having them take advantage of you.

15. Tap into Your Community

If expanding your professional network isn’t a priority for you, then you’re going to need to accept the fact that you’re not going to get as far as your contemporaries who do.

Being able to tap into a network of like-minded people anytime you want is a valuable resource that can only promise to keep on giving over time.

By joining a community, or simply building one around you, what you’re doing is giving yourself access to fresh new ideas, expertise, and contacts. Instead of paying a professional consultant, or a business coach for their time and knowledge.

If you happen to have a friend that the knowledge you want, then all you have to do is ask them and you get that information for free. Not only that, but a network can introduce you to new clients and potential investors, and give yourself a chance to find a mentor that can help guide you through your journey.

If you’re not sure where to start with networking you can easily find a local community of entrepreneurs by checking event sites like Meetup and Eventbrite.

On the unlikely chance that you can’t find a community in your area then take advantage of online communities, here’s a list of The Top Online Communities for Entrepreneurs, Marketers, Designers and Developers that you can join for free.

Also be sure to check out the New York Times bestselling book The Millionaire Next Door by Thomas J. Stanley for a variety of tactics and strategies on building relationships to strengthen your business.

16. Get a Real Financial Plan Going

One of the biggest reasons why it’s so difficult for the average person to save money is simply because don’t have a solid financial plan.

Without a financial plan all your budgeting at the start of the month just because an exercise in futility since there is no real understanding of where your money is going. The only way to solve this is to sit down and spend a couple of hours to set up a proper budget that you can follow.

Yes, I know this sounds like a lot of work but spending a couple hours right now is going to save you thousand of hours in the future and, most importantly, save you money.

You’ll find any number of budgeting and financial plans for you to follow online, but I personally prefer using the envelope system. Here’s a great video by Rachel Cruze where she runs through the basics of how the envelope system works.

Basically following this system you ensure that you’re never spending more than you earn. At the start of every month you allocate home much money you’re going to allow yourself to spend, after subtracting all upcoming expenses for that month, and whatever’s left is up money that you can use guilt-free.

17. Leverage Creative Partnerships to Reduce Costs

Together with my best friend, we built a business which generated over $160,000 in revenue in our first year alone. I couldn’t have possibly done that by myself. Unless you’re someone that’s determined to be a solopreneur, then forming a partnership with someone that you trust can be incredibly beneficial for the both of you.

A partnership means that you share the responsibilities, bring on board different skills, and keep you accountable when you need it. Even if not for the role of a co-founder, you are bound to find potential partners in specific areas that can help you achieve your goals.

Don’t immediately assume that the relationship ends as soon as the check has cleared, actively look for ways to continue improving that relationship and see where it takes you.

18. Look into Low-Cost Marketing

As essential as marketing is for any business there’s no denying that it can often become an expensive exercise when left unchecked.

From buying Facebook ads to spending thousands to improve your SEO there is no shortage of ways you can throw money at the marketing problem. However, if you look hard enough, there are also just as many different ways you can enhance your marketing without breaking the budget.

The best way to build a community around your brand is to delve into content marketing. I’ve personally seen great success by starting my own blog, launching my own podcast, The Side Hustle Project, releasing multiple blogging courses and using them as avenues to both make money blogging & attract attention to my own business. Despite what others might tell you, social media is still a valuable platform to gain organic traffic.

Be sure to check out my interview with Matt Nelson where he talks about the strategy and tactics he used to gain over 2.8 million followers. Even offline there are hundreds of different ways you can drive people to your business without spending a cent; like attending events populated by your target customers, developing a referral partnership with another business, or even taking advantage of influencer marketing by appearing on a popular podcast.

As long as you have a focus on providing real value to your audience, then you have a viable marketing strategy.

19. Used Gear and Equipment is Just as Good

While some of you reading this might balk at the idea of purchasing used equipment, you might be pleasantly surprised to know that most Fortune 500 companies have no such qualms.

Buying used equipment really is the way to go because not only do you get a piece of equipment that works just as well as if you bought it brand-new, you’ll also be able to get it for a fraction of what it would normally cost you brand-new.

A neat little trick to finding used equipment in great working condition is to pay attention to any corporate auctions in your area. Especially if any local businesses have recently gone bankrupt, many will hold auctions as a way to offload their assets as quickly as possible.

The only caveat, as you most likely already know, is to make sure you inspect the equipment yourself before you make a purchase.

20. Prioritize Your Education

The best CEOs and entrepreneurs in the world are always the ones who never stop learning. Just take a look at the likes of Bill Gates, Steve Jobs, and Richard Branson; they all have an unwavering sense of curiosity and are constantly looking for ways to educate themselves.

By setting aside a bit of time every day to improve your mind you’re going to be far more equipped to tackle new challenges, come up with new ideas, and make the right decision for yourself and your business. Not only will this tip help you save money but it’s also help you build your wealth at lightning fast speeds.

Now learning doesn’t have to be a laborious process where you have to sit down with a pen and paper and spend hours taking notes from lectures. At the risk of sounding like a scholastic mascot, learning can actually be fun as long as you tailor it to how you like to learn.

Listening to a podcast while driving, reading blog post ideas like these, or asking advice from a mentor. There are literally thousands of ways out there you can educate yourself every single day.

21. Get Creative with Providing Value

Keep in mind that money is just the most common, and universally accepted, way to provide someone with value. There are so many more ways to provide value to someone if you’re willing to think outside the box a little bit.

Do a little research on your potential partner before you approach them and see if they have any needs that you can potentially help out with. Ask yourself questions like:

• Do I have any knowledge or experience that would find valuable?
• Do they want any resources I can provide freely?
• What is it that they need the most right now beyond money?

Not only will this save you money but it’ll also help you further expand your network and help you develop your personal branding. Adding money into the mix will make any transaction feel impersonal.

But being able to offer something else can make the whole experience more personal and helps both parties see each other as equals and partners, rather than a simple customer.

22. Bring the Right People on Board

Ask any successful business-person on the planet about what the most crucial element of any fast-growing business is, and many of them will talk about the importance of bringing the right people on board.

Yes, you’re probably going to have to spend money and time finding the right people, but in the long run you’re going to save yourself millions of dollars and grow your business at a lightning speed by having a team you can trust and depend upon.

Taking the time to fill your team with “A-players” means that you’ll have people who believe in your vision, whose passion will fuel their work, and you can trust to do what needs to be done.

23. What’d I Miss?

Let me know in the comments if you have any great tactics you’ve used to save money each month.

How do you make sure that you stay in the black? What’s your secret?

Please share your best tips for saving money with our community!

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