How to save up for a house: The Minimalist Approach

I noticed something that some of the most successful and wealthy businessmen – not just in Nigeria, but all over the world – have in common and it is minimalism. Femi Otedola, Chairman of Forte Oil, is a perfect example. He took a photo with the famous Strong thing crooner, Banky W that made rounds on social media in which he wore a casual T-shirt, shorts and crocs while the latter was dressed fancy and one of the comments below the picture read, “One would see this photo and think Banky is richer.” Bill Gates, Jay-Z and Mark Zuckerberg are no different. Their style goes to reveal how much sophistication there is in simplicity.

With property prices steadily escaping from us it is getting more difficult to save a house deposit and purchase your first property. It seems the longer you take to save your deposit, the higher the price your house or investment property is going to be when you do get around to buying it. The only way out? Live minimally. The ideal minimalist is one who lives on basic needs and comfort at the time. Their spaces are very sparsely but elegantly decorated and rarely cluttered. Let me show you how this lifestyle can help you save, not just for a house, but for anything!

Spend wisely

Living on a budget because you’re trying to save does not equate to living in poverty but doesn’t mean it’s okay to be silly with your spending either. Cut down on the things you don’t need to buy, and if you’re not concerned about brands, buy the cheaper version. Life with Nigerian moms will teach you this – I know mine did. Instead of eating take-outs at work, you can get up earlier to pack your lunch. You can also do grocery shopping during the weekends and make soups and/or stews that you can store in your freezer to use over the week.

Depriving yourself of the good stuff would only make you miserable and unhappy to save towards investments so you would end up splurging. Be smart with your money by saving on the things that don’t concern you and putting the extra saving aside for your home.

Create another source of income

A colleague, Charles, is a realtor by day, graphics/web design maven by night and is getting his first house next month! If you intend making a major investment such as buying a house, you would need to spread your financial income tentacles. Find one or several side hustles. Just about every man jack can create a second income for themselves. You could live off your primary income and then save all of your secondary income.

It is likely that you could be using your current skills outside of your workplace but check your employment contract, if it says you can’t use your skill outside of work (for an income) then be careful. You may need to earn your secondary income from another skill.

Purchase non-depreciating assets

You will agree with me that food is an asset – it gives us energy required to function and for some of us food lovers, it just plain makes us happy. However, once it’s in your belly, its value is gone. You should only spend your money on assets whose value doesn’t depreciate or disappear.  The new iPhone XS you paid full price for is probably worth half of what you paid for it if you sold it. However, there are things you can buy that retain their value.

The objective here is to still have fun spending, but buy things that still hold their value such that you can resell when it’s time to buy a house. Some of these include: Antiquities, art and designer items. They are expensive but having or wearing too many of them at once says a lot about bad taste.

Get a piece of land

While you’re saving? Bizarre, but hear me out. Your savings for a house is NOT your emergency fund so you will have to forget about touching it till it is ripe for “harvesting”. The time it takes for land value to appreciate would be very beneficial to this process.

For example, in 2017, a friend of mine, purchased land at Ibeju-Lekki when it was about 450,000 Naira. He wasn’t ready to build yet, just wanted to acquire landed property. When Dangote Refinery activities began, it was being valued at 4 Million Naira and it is still rapidly appreciating. By the time investors are ready to set up hotels and malls there and he decides to resell the land, his ROI will be spilling out of his pockets.

My friend is smart. Be like my friend.

Work your way to the top

One of the biggest mistakes people make when it comes to saving for and buying their first home is that they want the dream home and they want it now. They want to live in their dream suburb, which is often out of their price range. It might be hard to enter the market, but once you are in, it is easier to work your way up to more properties and better suburbs. Consider entering the market in a cheaper suburb and working your way towards the better ones. Buying your first home is rarely a life decision so don’t stress about having to buy the perfect home right straightaway. Purchasing in a cheaper area will allow you to save your deposit much quicker and then you can use the growth in equity as a launch pad to a newer and better property later on.

 

Final Thoughts

Saving up for a house can be stressful, time-consuming and requires a lot of sacrifice but with the right strategy, you can smash those set goals and be well on your way to premium home ownership.

 

Need further advice? Talk to us. We’d be glad to help!

 

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