When saving for a home, there are a lot more things to account for than just the cost of your mortgage. The down payment, inspection and appraisal fees, closing costs, ongoing costs like bills and HOA fees, and paying for any repairs or renovations are just a few additional costs to consider when becoming a homeowner. Needless to say, all of this can get expensive, and saving in any way possible is a good way to prepare for the costs of owning a home. Here are a few tips for how to start saving for the home of your dreams:
- Develop a plan before saving anything – First, decide how much you’d like to save. Then, set a timeline or list of savings goals you’d like to meet by a predetermined deadline. This can give you a better idea of how realistic your aspirations are, and how urgent your savings plan needs to be. Next, figure out how you’re spending your money down to the cent – yes, every penny should be accounted for. Doing so will help you assess your expenses and evaluate everything you’re currently spending money on to see where you can cut down in the future.
- Reduce bad or unnecessary spending habits – Figuring out where your money is going can help lay out your spending habits so that the bad ones rise to the surface. Small expenses like regularly eating out or impulsively buying items you don’t need might not seem like a huge deal in the moment, but those costs add up. You might also want to consider eliminating monthly fees like streaming services or gym memberships that are no longer being used. With that being said, automating your necessary payments, like bills, can be beneficial since you know your mandatory expenses are being paid, and any money leftover can be put towards saving for your new home.
- Get a new job, or a side job – If you’ve been looking for an excuse to get a new job anyway, saving up for a new home is the perfect excuse for exploring a change in employment. With the job market currently booming, now is the perfect time to revamp your resume to get a better-paying gig. If you’re happy where you are but would still like to earn additional income, consider starting a side business like lawncare, or opening a shop on Etsy to capitalize on your passions.
- Focus on eliminating debt – Saving up for a major purchase like a home, which often contributes to people’s debt, while having other outstanding payments isn’t a smart move. While you don’t necessarily have to eliminate all your debt before buying a home, focusing on eliminating as much debt as possible before starting to save for a home is a good idea. This can help take the pressure off if you need to spend money elsewhere in the future, like an unexpected repair.