About the author:

Terry I. Weberman, The Kabinet CPA

Terry is a Certified Public Accountant in the New York Metro area with experience working with businesses and individuals across all backgrounds. He writes articles for the Kabinet blog and is here to help you on your home ownership and/or investing journey. Ask Terry a question by sending an email to info@kabinet.com and put “Terry CPA” in the subject line. This is a complimentary service as part of Kabinet’s commitment to you!

I previously wrote an entire post strongly encouraging you to buy a home if you can afford to. In my humble opinion, owning your primary residence is the cornerstone of building massive wealth in the United States of America.  

Now I want to explain how you build massive wealth after buying your first home to secure your family’s financial future.

Step 1 – List Your Monthly Expenses 

Financial advisors will typically recommend that you set aside a specific percentage of your earnings every month to go towards your future. I don’t want to say that from the start. The first step before we get into details is to review your monthly spending to see what you actually have left over to put away. 

I want you to open a spreadsheet and list every single thing that you spend money on. Mortgage, home repairs, daycare, food shopping, the whole dang list. This is going to take time and it should because it will be one of the most valuable life exercises you ever partake in. 

Don’t fool yourself and leave anything out. If you do, you are only lying to yourself. 

By doing so, you will already be in a better financial position than 99% of the planet. 

Step 2 – Turn Your Monthly Expenses Into A Budget 

The word budget has such a negative connotation and it’s truly a shame. Budget does not mean CHEAP. A budget can be $100 million per year or $10,000. A budget is a plan for how you spend money and a way to outline your routine costs. 

Investing cash is never a better choice than keeping a balance on your credit card or being late on car payments. In my opinion, you should take care of those high interest debts before you even think about investing. 

If your monthly expenses total $5,000 that is your monthly budget. Cover the $5,000 in routine outgoings then proceed to step three of my post.

I suggest using a spreadsheet to begin your budget because it is an easy way to get your costs onto a page. From there I recommend turning the spreadsheet into something more tangible and dynamic by using a budgeting app.

There are tons of budgeting solutions out there so do some research and find one that works for you. 

Regardless of how you choose to layout your budget, you will be in a prime position to build massive wealth as you settle in as a first time homeowner.

Step 3 – Prioritize Your 401k

If your employer has a 401k or other type of retirement plan I recommend that you contribute the maximum amount possible every month. It is even better for your wealth development if your employer matches your monthly contribution so ask at your company.

In my eyes, 401k matching is completely free money to you. It’s like winning the lottery so play it every single paycheck! 

Do not be scared if after maxing out your 401k you do not have any money left over at the end of the month. Of course I would rather you have monthly left over but you just bought a home and there are expenses.

Please RELAX, if you’re covering your monthly expenses and maxing out your 401k, you are fine! You have your priorities in order and that is what matters. 

Your 401k receives favorable tax treatment compared to a normal investment account, so always max out your 401k before investing elsewhere. This leads me onto Step 4 – Investing. 

Step 4 – Open a Brokerage Account

I am not an investment advisor so it would not be proper for me to make investment recommendations. I will instead suggest that you research the following terms as options for where to invest your monthly savings. 

Index fund. Money market account. Mutual Fund

The most popular no fee brokerages today are E-Trade and TD Ameritrade which will allow you to affordably purchase the investment instruments of your choosing. 

Once you have your budget in order you can subtract your monthly household income from your expenses to get what is left over. This may not be a very large amount but there has to be something left over, if there is not you are living ABOVE YOUR MEANS. 

The leftover amount of money must be allocated towards your future aka savings. This amount now becomes your baseline every month and will hold you accountable to save. Through hell or high water you must put this amount away every month, NO EXCUSES. 

Just like you can’t skip a mortgage or car payment you cannot skip your savings payment to yourself from this day forward. 

Step 5 – Be Patient

Remember, this post is about what to do with your money after you bought your first home. Building massive wealth takes time so you must be patient. 

Buying a home was an incredible first step in your journey but to progress you must follow these steps. 

If you do anything from this post, PLEASE review your monthly expenses. 

Good luck and see you at the top! 

Note

Terry, The Kabinet CPA, has made every effort to ensure the accuracy of the information within this article was correct at time of publication. He does not assume and hereby disclaims any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from accident, negligence, or any other cause. Speak to your advisor to make sure you qualify for such benefits or opportunities. Do not rely solely on this abbreviated article, it is for informational purposes only.