Whether you’re a young person looking forward to future or a current renter who wants to start saving to purchase a house, right now is the perfect time to start saving. Very few people can actually pay cash for the full price of a house, but having a reserve of funds, even just to cover the down payment, can lessen the burden of a loan and ensure that you get the home you want. Here’s how to start saving for your dream home:
Make a budget. Whether you are a busy professional or a mother of four, a household budget is essential. Knowing how much money you have coming in, where it’s coming from, how much is going out, and where it’s going each month is the foundation to any savings plan. Plus, having a handle on your finances is just part of being a successful human being.
Determine how much you want to save each month. You might already be spending far less than you are making. Or, you might be right at, or over your limit. First, determine how much you want to start putting away. Even $100 a month can make a major difference when it comes time to buy. If you are spending more than you make, make a concerted effort to cut back unnecessary expenditures.
Set up an account just for saving. When all of your money is in one pot, it’s easy to forget that you are supposed to save $100 a month. Instead, create a separate bank account just for your house fund (one that accrues interest), and have whatever amount you want to put away each month direct deposited into that account.
Save every cent of any and all windfalls. Did your boss give you a huge Christmas bonus? Did you just get your tax refund? It’s extremely tempting to just spend it the moment you have the check in your hands, but unless you really need that money to cover a bill, put all of it into your house fund.
Downsize your life. If you are paying $1000 a month for a three-bedroom apartment, but you only really need two bedrooms, moving into a smaller place right now could make your dream of owning a home much more achievable.
Remember, if your dream home is $400,000, you don’t have to save $400,000. There’s nothing wrong with getting a home loan. Saving as much as you can beforehand makes getting that loan and the house you want just that much easier.