3 Ways To Afford Your Dream Home In The Long Term

In this post, I share with you several ideas to help you better afford your home!Whether you have already gotten a home or you are intending to buy one in the future, we both know that it’s crucial to be able to comfortably pay off your loan installments and the other household expenses that come along with owning a home. 

Let’s dive right in!

1. Budgeting

If you have read my Financial Success Guide, you would know that I stress heavily on the importance of setting up a budget.

Budgeting simply means setting up a plan and being in total control of your money.

A general rule of thumb of budgeting is the 50-30-20 rule.

• Set aside 50% of salary for living expenses;
  • (eg. Groceries, utility bills, transport costs, food) 

• Set aside 30% of salary for lifestyle expenses;
  • (eg. Movies, Travel) 

• Set aside 20% savings and investing for your long-term goals.
  • (eg. Future Home, Retirement)

These figures are just guidelines and you are free to tweak these figures, however do keep in mind that a minimum of 20% should always go to your long-term financial goals.

Just a fun fact for you is that the wealthy budgets the other way round, setting aside 80% to saving and investing and the rest of their 20% on spending!

So how will budgeting be able to help me to better afford my home?

By knowing where your money goes, you would be able to have a rough idea whether you are overspending or not.

For example:
​
If your total expenses are over 80% of your salary, you’ll know that you are spending way too much and not saving enough towards your long-term goals!

An expense tracker mobile app will be able to help you identify where your money disappears to so that you would know exactly where to cut down on your expenses. ​

2. Make Money in Your Spare Time

There are tons of ways to earn extra income on the side. In my Financial Success Guide, I shared with you 3 ways to earn more money. I’m going to share with you another 3 ways that you can use as well.

1. Driving

Being a driver for companies like Uber and Grab is a great way to earn some money on the side as you can choose whenever you want to work and you have the convenience of owning a car too!

If you already own your own personal car, you can use your earnings to offset the cost of your car ownership. If you don’t own a car, you can rent a car from their company for a way cheaper price than owning one yourself!

However, take note that these companies usually have quotas. Before signing up, make sure you are able to hit them and that you have calculated your future expenses carefully, such as your car insurance, parking fees and fuel costs.

If you prefer to have the flexibility to work wherever you want, I’m going to share 2 ideas with you.

2. Online Trading

Learn to trade financial instruments like options, stocks and foreign currencies (forex).

The only downside is that you’ll need to spend some time learning, studying and practicing how to trade.

To speed up the learning process and prevent some costly trading mistakes, there are a few schools in Singapore that teaches you how to trade, such as Sonic R. Mastery and Online Trading Academy.

But of course, you’ll need to pay course fees for the benefit of speeding up your learning journey and learning from the experts. 

The reward is that once you are good enough to make profitable trades consistently by yourself, you can work anywhere around the world as long as there’s internet connection!

I personally know a couple of friends who earn more through trading than through their day job and guess what?

They never saw their bosses again!

3. Affiliate Marketing

Promote other company’s products online and receive commissions for selling them. Some examples of popular affiliate programs include Clickbank and Amazon.

While you have the flexibility to work whenever you want and wherever there’s internet connection, the downside is that you don’t have any control over the products you promote. That means Clickbank could decide to remove a product you’re about to promote whenever they want.

So how will having a side income allow me to afford my home in the long run?

There are 2 ways to go about this.

1. You can either continue working and earning your side income to fund your house, or
2. You can use your earnings from your side income to invest and use the returns to fund your house.  

Which brings me to my last tip.

3. Make Money While You Sleep

Source: creatingapassiveincome​The above ideas I’ve shared with you trades your time for money. So you would have to work really long hours to keep both your main income and side income flowing into your pocket.

Fortunately, there are tons of ways to make money while you sleep and I’ll be share with you 2 ways.  

1. Rental Income

To those who are current home owners, you can receive rental income by renting out your whole house if you have met the Minimum Occupation Period (MOP).

The MOP only applies to public housing and it’s the minimum period you have to live in your house before you can rent out or sell your home. 

If you have not met your MOP requirements, you can rent out your rooms first.

Once you have found tenants, you can use the rental income to pay off your monthly loan instalments.​
​
2. Dividend Income

Now what if you don’t own a home yet? Fret not, there are still a couple of ways you can earn income while you’re sleeping.

You still can invest in Real Estate Investment Trusts (REITS), dividend stocks, index funds and mutual funds (unit trusts) and use the dividends earned from those sources to pay your loan instalments.

Investing requires a certain level of knowledge and skill, so there are 2 ways you can go about doing it.

1. You can either invest your own time, effort and money to upgrade your own knowledge and skill either through online websites or self-development courses; or
2. You can invest your money to leverage on a professional’s time, effort and expertise.  

Both have their pros and cons.

For the 1st way, the pro is that you can save on the fees of hiring a professional, but you’ll have to spend on self-development courses.

The con is that even after spending time, money and effort to learn to invest, you’ll need to spend additional time to analyze and monitor your investments. 

For the 2nd way, the pro is that you can tap onto a professional’s time, effort and expertise who will help you to make investment decisions and monitor the funds for you.

The con is that you have to pay fees for that benefit.

Either way, making your money work for you is essential if you want to better afford your home and live a more comfortable life.