How to Save Money for a House
To view our 3 infographics on saving money for a house, check out these links:
- 19 Life Changing Tips and Tricks for Saving Money
- 25 Brilliant Lifestyle Habits You Need to Save
- 10 Essential Budget and Bank Tips to Save Money
Just like most people, especially those who are just renting, you dream of one day having your own home. However, again just like most people, you don’t have the money right now to buy one. You don’t have to worry because your reality now doesn’t have to be your reality forever. You dream of one day being handed with the keys to your own house. With the right tips on how to save money for a house, that dream can be a reality.
In this article, practical tips will be provided that can help you save. Follow them and soon enough, you’ll be off house hunting.
Start by Establishing a Monthly Budget
You can’t effectively save money if you don’t know how much you need to spend a month. After all, saving money is about setting aside money that you get from spending less than the money that’s coming in.
Make a list of all your monthly expenses. Make sure to list them according to priority and that you track the expenses that you’ve already paid. As a tip, take advantage of automatic payments like electronic payments. This way, these expenses are taken care of on auto-pilot.
Set Aside a “House Fund” Savings Account
It’s not a good idea to have one savings account for everything including your savings. It’s a good idea to have a separate savings account just for the sole purpose of tracking your savings for buying your home. This way, you’ll know exactly where you are as far as your house fund is concerned.
Once you have a house fund savings account, one of the most practical tips is to make the savings automatic. You can ask your company’s payroll department to automatically send a fixed monthly amount to this savings account. This way, you’ll add money to your savings regularly and you wouldn’t even notice that you’re already building quite a good amount of savings.
Provided that you respect this separate savings account by not taking money out of it for regular expenses, it’s a good way to protect your savings and continue growing it. After all, you can’t spend what you don’t have in the first place, right?
Create More Streams of Income or Make Your Current Stream More Powerful
You can create a more powerful income stream by working more. This means volunteering for overtime work or even taking a second job. You can also create more streams of income by having a small home based business. Just make sure that it’s a low-risk one and that it doesn’t affect your house fund.
With this tip, you’ll earn more money monthly which allows you to put in more money into your house fund.
Funnel Some of the Money for Your Retirement Fund into Your Home Fund
It may not sound like a good idea at first, but remember, your home is also an asset and should be a part of your retirement. Sure, you can funnel all your funds into your retirement fund, but later on, you’d have to take money out of it to buy a house. So why not create two separate funds? You’re simply saving in a different manner.
It’s still recommended that you invest in your 401(k), but you may want to stop at 6% because that’s the usual maximum percentage that employers will match anyway. You can then funnel the rest into your home fund.
Learn to Save
It’s not enough that you save on your groceries by using coupons. On that note, go ahead and save money whenever you can. It’s just that these are just small savings. While they do add up, it’s better to complement that with saving money on a bigger scale.
One of the most productive tips is to save on a bigger scale. For example, if you’re really serious about saving for a house, you may want to downgrade your annual out of the country family vacation into an out of town one. You’ll save a lot of money this way and it can go to your house fund.
Pinching pennies is good, but grabbing bills by the handful for your savings is better. Learn to save on a small scale and a bigger scale.
Move to a Cheaper Home
This can help you save money even if you’re renting. Let’s say that you’re currently renting a two-bedroom apartment because you have one room that you use as an entertainment room. Why not move to a one-bedroom apartment instead and save a lot of money in the process? Let’s say that the difference between the two apartments is $200. That’s $200 a month that can go straight to your house fund. Think of it as downsizing so you can upsize later on.
As another tip, you can have a garage sale and sell the things that you don’t need before moving to the smaller apartment. You can de-clutter your life and earn thousands of dollars in the process.
Treat it as if You’re Going on a Diet
For a diet to be successful, you need the support of everyone around you. In the same way, saving for a house requires the support of everyone around you as well, most importantly your family. The whole family needs to chip in. It may mean fewer shopping trips for the wife and delaying the iPhone upgrade for a little while. You also need the support of your friends. They need to understand that you’re saving for a house so they can’t demand you to drop everything to join them on a weekend trip to Vegas.
Just like a diet, there will be bad days as well. In a diet, you may give in to that tub of ice cream. This doesn’t mean that you should just scrap the whole idea of dieting altogether.
If you’re saving for a house, there will come a time when you won’t be able to add some money to your house fund. There may even be a time when you’d have to take some money out of the house fund because of an emergency. As a practical tip, tomorrow’s another day. If things go wrong, and they will, just go back to your normal routine. Don’t stop saving for a house. Just go back to the program.
With these tips, your dream house will soon be yours. Remember, have fun while doing so!