By Tamar Hermes, Real Estate Investor and Author
Most women hear the word “finances” and want to run for the hills. They resent money for having power over them while at the same time letting it dominate their existence, living as victims to money stress as opposed to standing up and taking charge.
Learning to live in harmony with money isn’t that hard, and growing wealth isn’t impossible, either—but both things start with taking ownership of where you are right now, deciding where you want to be and moving in that direction. To that end, in this article, we’ll go deeper into wealth-building strategies and how to protect your assets.
Right off the bat, I want you to know that I’m not a CPA, licensed financial advisor, or attorney. Even so, I’ve made millions, saved hundreds of thousands in taxes, and spent a lot of time learning from the best professionals— and my clients have also profited from my support. Now, I’m sharing my experience and proven methods with you.
However, I do recommend you explore any major financial decisions with a licensed professional. Make sure you educate yourself, too. CPAs and financial advisors don’t know everything, and many don’t understand real estate. As I mentioned, I got a lot of bad advice from so-called “experts” in my early days. As I taught myself and learned from the right people, my wealth and confidence grew in tandem.
If you aren’t working with professionals who support your goals, look for a new team. Seek opinions and choose experts who share your vision and believe in you. Don’t listen to your uncle who lost all his money on one deal and thinks real estate is risky. Talk to people who understand—and have—what you want.
In my case, I instinctively knew I wanted to save as much of the money I earned because it seemed like a great way to alleviate the stress of not having enough. I had no idea how to grow or manage money.
If You Don’t Keep Track of Your Money, It Will Slip Out of Your Hands
You need to decide what system will work for you to track your money. Some women, for example, shouldn’t use credit cards. They see something they like, and the credit card makes it easy for them to buy it, whether they can actually afford it. Remember: a dollar spent today could be worth substantially more tomorrow. Of course, there’s no right or wrong way to track and spend; only what works for you as you move towards your goals. What’s important is that you take charge over what you have and stay aware of the numbers.
You need to look at your finances at least once or twice a month so that you know what you have. That’s the only way to manage and make money grow. There’s a story of a UPS guy who only made $14,000 a year but who saved millions by the time he retired. There is no doubt that he was mindful of his spending and was an expert in his finances.
I was born without money, and I disciplined myself to buy only the things I could afford. Of course, I have still spent money on things that I scratch my head about in retrospect, but overall, I have stayed on track with my budget and stuck with it. I have always kept the bigger picture in mind of saving money and buying property so that while I was working my day job, my real estate was making money for me on the side. Once you get in the habit of saving money to invest, buying properties and seeing the profit, you’ll feel incredible.
Write Down Your Numbers
It’s proven that when you write down your numbers and goals, you’re 60% more likely to reach them. Block out an hour each week of uninterrupted time to manage these tasks. The only one who’s stopping you is you. It takes less time than you think, and once you learn how to track your expenses, you’ll realize it isn’t as hard as you thought. If you avoid keeping track of what you have and where you’re going, the odds of success won’t be in your favor.
Whatever you focus on expands, so if you’re focused on money, you’ll have more. This doesn’t mean you are money-hungry! You’re simply focusing on your goals. Having a system and budget for your spending enables you to create savings. This is the money you will likely invest, so you must become an expert in your spending habits.
The other thing you will notice is that when you start to track your money, you’ll invite more money in. When you’re not resisting money, you’ll see the possibility of making more, expanding how much you have and how much you believe you can have.
It’s also critical that you pay attention to how your investments are tracking. Growing your wealth in real estate requires you to move money around, so if you aren’t tracking your finances, you can end up losing a lot. If you don’t have the time to manage your investments, hire a bookkeeper.
If your finances are simple, you don’t need a fancy accounting program. You can use an Excel spreadsheet or simple bookkeeping software like Quicken or Google Sheets. You might even hire a bookkeeper to track a QuickBooks account for you and show you where you’re spending more than necessary.
Always give yourself a deadline for checking your finances and log it in your calendar. If you don’t do this already, it’s a skill that will serve you well in real estate investing. You will become your own accountability partner.
It’s also important to make sure you’re saving a certain amount each month for unforeseen expenses. Real estate will almost always make you money, but you may sometimes be in the red for a few months. You need to be prepared for those times.
Making Financial Choices and Priorities
There is a saying that financial guru Dave Ramsey says a lot: “If you will live like no one else, later you can live like no one else.” When my clients start to look at their finances with me, they inevitably see places where they can cut back, save, and make more money. Making small adjustments to your spending to save and then invest can make a huge difference in how most of your life will play out financially.
Look at your line items. For example, going out to dinner three times a week will eat away at your potential savings fast. A lot of people throw their money at Starbucks every day—can you buy a tall instead of a venti? Get an Americano instead of a double-skinny-vanilla latte extra shot with whip?
Look at your utility bills: you may be able to lower your cable or cell phone payments if you call the companies and explore other plan options. A year ago, I switched my cable from one company to another and saved about $75 a month! It may feel like a lot of work to change your habits and small joys or to renegotiate with a customer service rep, but you’ll have a sense of accomplishment and will get to enjoy all that extra money as you invest it later. If you really can’t be bothered to spend a half an hour on the phone, have an assistant or a teenager looking for some extra cash make the calls for you. My kids have learned a ton making these sort of calls over the years.
I hope I don’t upset too many of you by saying this, but buying new cars is a huge waste of money. I can’t tell you how many times clients show me their expenses with a monthly lease payment of $600-$800 a month on a car! If you take that $600 a month and multiply it by 12, it equals $7,200. In five years, that’s $36,000, which is enough to put a down payment on a property that could put you on the path to financial freedom.
I also can’t tell you how many clients I have who spend way too much on rent instead of investing, saving, or buying a home. They do this because they want to live in a certain area and don’t want to modify their quality of life for the sake of getting ahead. Rent is the fastest way to blow your entire budget, and it leaves you with nothing to show for yourself once you move out.
I’m not saying to deprive yourself of nice things. For context, I’ve bought used luxury cars and have only purchased three new cars in my entire life. A few years ago, I bought a new Tesla, but I bought it when I could afford it and didn’t have to take money out of my savings to do it. If I could not have afforded a new one, I would have been happy buying secondhand. Making these sorts of choices over the years has really made a difference in my bottom line.
Essentially, if you’re spending more than you’re making, it’s difficult to reach your goals. Though you will need to make some tough choices to avoid that, I’m not telling you to create struggle or hardship for yourself. Instead, and ways to make nice dinners at home and get a car you can enjoy, even if it’s not a brand-new model—just buy a trustworthy used one so you don’t throw away your savings on monthly expenses.
No matter what the specifics are, the simple rule is to limit the amount of money you have going out the door compared to how much you have coming in. Remember: with every nice purchase, you’re trading luxury now for a lifetime of freedom later. If you can manage your finances correctly, you will be able to buy a brand-new car and the house of your dreams not too far in the future!
Think of this as a “money diet.” If you start out with the goal of losing 30 pounds in a month and deprive yourself of every bite of food you enjoy, you’ll get frustrated and quit—abandoning your goal all together. Be kind to yourself in the process of reaching your financial goals. Pat yourself on the back for small wins and structure your budget in a way you can live with. It’s not about deprivation; it’s about the long game. The most important goal is to save so that you can afford to start buying real estate and growing your portfolio.
About the Author: Tamar Hermes is a real estate investor, the founder of the financial consultancy Wealth Building Concierge, and the author of The Millionairess Mentality: The Professional Woman’s Guide to Building Wealth Through Real Estate. She has been featured in countless media including Bigger Pockets, Conscious Millionaire Podcast, Land Lording for Life Podcast, Passive Income Through Multi-Family Real Estate Podcast, and so many more. With more than two decades of real estate investing and wealth-building experience, Tamar teaches high-net-worth women how to become real estate investors. Read her interview here: https://wemagazineforwomen.com/meet-woman-in-business-tamar-hermes/