Someone once said “it takes money to make money,” and that same sentiment applies to saving money. Although at first, it sounds backwards. How could spending money actually contribute to saving money? Aren’t spending and saving mutually exclusive?
While spending and saving are indeed opposites, there are several instances where saving money requires spending money first.
1. Property investors: spend money to save on operating costs
Property investors have all kinds of expenses, including insurance, property taxes, mortgages, repairs, maintenance, court fees, and all the costs associated with filling or turning over a unit. These expenses are unavoidable, but many investors save money by hiring a property management company.
Property management companies handle all the day-to-day tasks associated with being a landlord, but they also get great deals with local contractors for repairs and maintenance. Since property management companies handle repairs and maintenance for multiple landlords, local businesses are often willing to cut them a deal in exchange for an exclusive contract.
Many property management companies – like Green Residential in Houston, TX – charge investors a flat fee to keep costs predictable. If you’re a property investor (or considering becoming one), put a property management company at the top of your list.
2. Parents: buy bulk grocery items to save money on meal prep
Whether you have one child or ten, groceries are expensive. The price of food has been rising for years and in some areas you’ll pay $5 for a single avocado and $13 for a pound of beef.
A single person can easily spend $800 per month on food. When you have multiple mouths to feed, clipping coupons doesn’t seem like such a bad idea. However, clipping coupons isn’t the only way to save money.
The number one way families save money on food is buying in bulk from stores like Costco and Sam’s Club. While single people might only buy bulk items like paper towels and toilet paper, smart families buy everything in bulk. This requires paying a lot more up front, but saves a ton of money in the long run.
The price of cheese, or example, can go down by more than a dollar per pound when you buy in bulk. That’s a significant savings when you buy 5-pound blocks. The cost of beef goes down as well, as does the price of items like rice, pasta, and other dry goods purchased in bulk.
Cooking at home is one of the fastest ways to increase your cash flow, and will help you buy food in bulk without making you feel like you’re depleting your bank account.
3. Buy books and educational materials
Investing in materials that help you learn new skills and strengthen your existing skills can provide a massive return on investment. For example, say you’re starting a blog and don’t know how to launch a WordPress site. By taking a few courses, you’ll be able to launch your site and maintain it all by yourself. Or, if you’re starting a business, buying books related to your industry will help you immensely.
Successful business owners and entrepreneurs never stop learning. If you’re running a business and haven’t become a voracious reader, give it time – you will.
4. Business travelers: spend money to get credit card rewards
Many credit cards have rewards programs that provide cash back for each purchase, or awards points you can redeem for flights and hotels. If you travel often, some of these programs can save you money on travel expenses.
You have to do the math to figure out whether your credit card rewards are worth it, but if the math works out, you can save big bucks. The key is to use your rewards credit card only for expected purchases and pay the bill on time to avoid interest. You don’t want to rack up unnecessary debt just to get points or cash back. That would defeat the purpose of using your card to save money.
5. Place your money into short-term investments
While not technically considered “spending” money, putting your money into short-term investments is a great way to save money over the long-term. For instance, investing $5,000 in a 2-year CD will effortlessly raise your savings account balance. The only downside is you can’t access your money until the term is over without paying a penalty.
Saving money takes time and patience
Saving money requires time and patience, but doesn’t always involve tucking away part of your paycheck. To start saving even more money, consider some of these methods to supplement your existing savings strategy.