Rental income is one of the steadiest ways to create an additional income stream. However, when it comes to spending that money, you need to be smart about it.
With infinite options out there, picking the right option is crucial if you’re going to make the most of your money. Here are some alternatives you should consider as you think about how to spend your rental income.
1. Pay Down Your Personal Mortgage
When you have the money, you could consider paying down your own mortgage faster – get rid of it as soon as you can. There are plenty of ways to accelerate the progress of your mortgage payments. You could increase either the payment amount or the frequency of payments (biweekly instead of monthly) or refinance to a shorter-term loan.
It’s a great feeling to be debt free – your rental income can get you there faster!
2. Build Up Your Portfolio
If you’re renting, you clearly own property. Now you could consider using your new income stream to invest in stocks and bonds to diversify your holdings. The key to smart investing is making sure you don’t put all of your eggs in one basket. Having a diversified investment portfolio lets you to take greater advantage of the myriad of investment options and reduce your risk.
3. Make Some Renovations
You can look at renovating your home as either an expense or an investment. Most people tend to think of it as the latter. Not only is renovating your home a solid long-term investment, but it’s also a great way to make your home more comfortable and appealing.
It increases the value of your home, can reduce your maintenance costs by making it more efficient and, most importantly, it gives you a chance to make your space your own.
4. Take A Trip
All your spending doesn’t have to be an investment, sometimes it is great (and necessary) to take a break and treat yourself to a relaxing and invigorating vacation. Explore excotic places, meet new people, see different cultures, spend time with family or simply break free from the monotonous routine of work.
5. Give Some To Charity
You don’t need to spend all your rental income on yourself. What is the point of having it all if you don’t share with those who could use your help? There is plenty of evidence suggesting that giving to a cause you believe in can make you feel happier.
Find a cause that is close to your heart and donate what you think would help. At the end of the day, seeing that your money helped someone can make you happier than spending all of it on yourself.
6. Invest In Your Kids
Investment comes in all forms. One of the biggest investments you can make for the future is the education of your children. Education isn’t cheap and counting on a scholarship isn’t really responsible financial planning.
If you have the financial means, supporting your children could be the right thing for you to do.
7. Buy Something Nice
If none of these big options seem to click, you can always spend your rental income on getting one of the things on your wishlist. It doesn’t mean you have to overindulge yourself. Sometimes there’s something you just want and, with rental income, you’ll have a better shot at getting it.
With so many great options available, it is crucial to prioritize your preferences and go for what matters most to you. Whichever option or options you go for, just remember to have a well thought out plan.