Saving to buy a home can often be an overwhelming task, or seemingly impossible, but it doesn’t have to be. There are many ways to start saving for a home. It is easier than you may think and lighter on your pocketbook than you are probably expecting. Here are some helpful tips to get you started on building your home savings.
The Basics on Saving for a Home
There are a few very basic yet very important ways to jump-start those home savings. Although this may sound like an obvious one, the first thing to do is start transferring a fixed amount of money into your savings account every pay period. This doesn’t have to be a large amount of money. It just needs to be a consistent amount of money that you can stick to.
Here is how to figure out how much you can afford to transfer. Make a list of all your monthly expenses, ensuring you include gas, food, and miscellaneous spending money. Then make a list of your total monthly spendable income. This is the income you take home after taxes, insurance, and any other deductions. Figure out the difference between these two numbers and from this amount figure out what is a realistic amount of money you could do without each month.
You may decide you can put away 10% of your monthly income. Or, you may come up with a fixed number such as $100 every two weeks. Again, the number does not matter. Come up with something realistic and you stay consistent with transferring that amount each pay period.
Handle High-Interest Rates
Reduce your interest rate debt! This is such an easy way to save yourself money each month, and it is often overlooked. The concept is simple – the more interest you are paying on a car loan, credit card, etc. the more it is eating into your expendable income on a monthly and annual basis; so pay off the highest interest debt first and work your way back towards the lowest.
For example, if you have a credit card with an interest rate of 15% and a car loan with an interest rate of 5% than tackle paying off your credit card debt before you pay off your car loan. You still must pay your minimum payments on all your debt, but throw any extra money you have at paying off your highest interest rate debt first, and once that one is paid off move to the next highest and so on until you are DEBT FREE!
Trim Down Expenses When Saving for a Home
One of the best ways to trim down your expenses is to start with all your monthly expenses and try to whittle each one down as much as you can. Set aside some time to make phone calls to all of your regular vendors and see what you can do to trim your bills down.
For example, call your cell phone provider, cable company, home security company, insurance company, etc., and let them know you are shopping around for better prices on similar services. Most of these companies run promotional discounts for six months to a year, offer bundle discounts or other various ways to keep your bill low, and they are eager to keep your business – but you have to call and ask! I do this at the beginning of each year in January and usually find that I save our family a combined $150 – $200 a month simply by communicating and negotiating promotions or cutting down our bills with all of our regular vendors.
Another way to trim your expenses down is to cut out things that are not necessary. That $2.00 cup of coffee every morning on the way to work adds up to $10.00 a week; this may not seem like a lot but multiply that by 52 weeks in a year and it adds up to over $500.00 a year!
Here is a list of some easy ways to save small amounts of money each week which can add up to significant amounts of money over the year:
- Cut out daily routine visits to coffee shops and instead brew your morning cup of coffee at home.
- Pack a lunch to work rather than eat lunch out.
- Limit the number of times you eat dinner out each week; buying groceries and cooking at home is much cheaper!
- Eat leftovers! Not only does this keep you from going out to dinner it also makes your groceries last longer.
- If you are able, do self-maintenance and personal care techniques on yourself rather than pay to have them done. Thins such as: painting your own nails and trimming your own hair can save you a lot of money annually.
- Use your gas wisely. Plan errands outside of your regular commute in advance. This ensures you are traveling to places on the way to somewhere you were already headed.
- Minimize your shopping and only buy necessities.
- Utilize public bartering and selling forums such as LetGo, Nextdoor, and Craigslist to sell items you are no longer using or to purchase used items you may need.
We are Here to Help!
By following some or all of these simple tricks and tips you can build up that savings account. Here at The Mower Group, we are always willing to share advice on ways to save for a home. Also, we know the most economical ways to get into your first home. We are happy to share what some of our other first time buyers have done to get into the housing market. Additionally, if you are interested in sitting down with our mortgage broker we can help with that. This way you can see exactly what kind of mortgage you could qualify for, inquire about how much savings you would need to purchase a home or seek advice on any other related area. Please reach out to our team.