Most often the hardest part about buying a house is saving up for the down payment, the closing costs, and the associated fees. A large chunk of your savings, or maybe the entirety of it, is all going towards one of the biggest purchases of your life. So where do you start? How do you plan to save enough money for this important purchase, and how do you stick to such a plan? Here are a few financial tips you could implement into your home-buying plan:
Make a detailed budget
The first and most important step to saving money is creating a detailed budget. If you don’t have a plan, you may fall back into bad habits and let saving money for that dream home slip through your fingers. There are free budget templates you can get online, or you can design a personalized one of your own. Whatever you prefer, just make sure it is something you think you can stick to and benefit from.
Having a plan is great, but if you don’t have regular updates and keep up with it, your master plan can easily fade day by day. Making time for weekly, monthly, and yearly updates is a great way to make sure you are staying on task and saving as much money as you had originally planned. Initially, it might even be beneficial to do daily updates, especially if you have a hard time getting into the habit of saving money.
Put the money somewhere you can’t access easily
People have different ways to save money, whether it be saving it in a big jar marked “Dream Home” or keeping it in their checking account for easy access. These may be options that work for some people, but we suggest changing it up a bit. Having your saved money easily accessible can often prove to be a temptation. If you put your saved money somewhere that is difficult to get to, there is a better chance that you will not defy your budget.
One way to do this is to open a separate savings account that is not linked to your checking account. Keeping money in your checking account could end poorly if you forget how much money is supposed to be saved and what money you can spend. (This is also where a budget can come in handy.) Additionally, there is often a withdraw limit on savings accounts that resets monthly, making it more difficult to keep withdrawing money from it. This could prove to be the financial motivation you need not to touch the money you have in savings.
Utilize automatic saving tools
If you have your paychecks automatically deposited into your account, most employers also offer an option that allows you to allot a certain amount of your paycheck to be taken out and put straight into a savings account. That way, when you get your paycheck, you won’t even have to worry about putting aside the money yourself; the money will already be separated.
Cut out any unnecessary expenses
Part of saving money is deciding what expenses are necessary and what expenses you could really do without. Try making a list of all your monthly expenses and decide which ones you can get rid of. This will help lighten the load on the things you have to pay for and will ultimately help you reach your savings goal faster.
Saving for a home can be overwhelming, but if you use these financial help tips, we think your experience will go much more smoothly.