Whether you’re in a seller’s or a buyer’s market, finding a house that feels like home is enough to make you shiver with excitement. However, buying a home is a huge financial decision that entails not only a lot of responsibilities but also financial readiness. Before taking the plunge, it’s important to be ready for a sufficient down payment. So, if you’re looking to buy a house, there’s no better time to save up for it than now. Keep reading and learn how to save money for buying a house.
Determine how much you can afford
When it comes to a mortgage, the rule of thumb is to make sure you don’t spend more than 25% of your monthly income to pay for the monthly mortgage dues. Allocating a huge chunk of your budget for the house you bought might leave you unprepared for any financial emergencies. Because goal-setting is important when saving money, it’s essential to determine the cost of the house you can afford. This way, budgeting becomes easier and reaching your goals is more achievable.
Determine your timeframe
The goal you set for your monthly savings may vary depending on the duration of the mortgage. For example, if you’re planning to buy a house that costs $50,000 in 4 years, you have to have a total of $12,500 savings per year.
Have your paycheck deposited into separate accounts
To make sure you get to set aside an amount for your savings and don’t spend it, it’s a good idea to split your paycheck into separate accounts. This may seem like a simple and easy step but it’s a powerful way to help you get to your goals! Remember, out of sight, out of mind.
Use cash for purchases
Instead of using credit cards, try to use cash for purchases as much as possible. This will help you save a lot of money down the line because you get to spend less on shopping and food. On the other hand, the convenience of a credit card can make you buy frivolous purchases. Try to slow down your spending by using cash when paying for food and other items.
Free up some room in your budget
Make your savings goal more doable by clearing up some room in your budget. Your goal isn’t to save up hundreds of dollars a year. You’re looking at saving up thousands. Therefore, it’s time to take a closer look at how much your money is spent on a monthly basis.
Write down on a piece of paper all your daily, weekly and monthly expenses. Take a look at the items you can remove from the list, the ones that are not really important. If you’ve been spending a lot on dining out with friends or shopping, you might want to cut down on these expenses. Being able to manage a tighter budget may not be all that easy but it’s going to be worth it!
Look for a side hustle
Another excellent option to consider if you want to save money is to earn money on the side. Do you have special skills you can use to earn additional income, like writing, photography or music? Or if you have spare time, maybe you can look for part-time jobs or freelance online jobs. There are plenty of options. All you have to do is to look around and you’ll find something to help build up your savings for your dream home.
Sell old stuff
If you think it won’t make a difference to sell unused or old stuff, it will. Each and every cent you earn and save can go a long way. Start decluttering around the house and look for things you can sell. This is hitting two birds with one stone because you get to earn more income and reduce the stuff to take to your new place later on.
The road to homeownership isn’t easy. But if you’re financially ready, everything else becomes easier. Make this dream a reality and start saving up for your dream home now with these simple steps.
Ready to build up your savings? Start your journey with Calcite Credit Union. Please feel free to give us a call for more information.