Before looking for tips to save money for your first home, it would be helpful if you knew how much money you need to save. If you want to buy at the mortgage, you should save at least 25% of the sale price for the first down payment, closing the deal, moving charges, etc. But how to save the money for your first home? The tips are given in the text below.
Let’s have a look!
How to Save Money for Your First Home- 6 Tips You Must Know
- Set a Target
The first step towards saving money for your home is to estimate the time you have. If you plan to buy a new home in the next five years, you have a reasonable time to save a good amount. But if you decide to buy it soon, you need to roll your sleeves up and start saving from today.
Whether you plan to buy a home shortly or after some years, our tips would help you either way.
- Look at Your Expenses
‘Light gains make a heavy purse’ might seem cliched, but it is a worth remembering tip for saving money. Start with your grocery shopping. Before leaving for the monthly grocery shopping, check with your pantry to know what is already there, so you don’t shop for extra items. Next, cross the luxury items from your shopping list you ‘think’ are necessary, but they are not actually. Also, stick to your list and avoid extra shopping.
Believe it or not, taking care of power consumption, water wastage, and canceling the cable subscription (when all of your family members stick to phone binging) would save the extra bucks seamlessly.
- Use 50/30/20 Budget Rule.
If you find it difficult to save money every month, we recommend applying the 50/30/20 rule. Divide your salary (after paying tax) into 50%, 30%, and 20% portions to implement this rule. Keep 50% for your necessities like utility bills, groceries, etc. Use 30% for your wants (that cinema or a coffee cup thing) and set the rest of the 20% aside for saving purposes.
Now, if you want to buy your home earlier, you can save that whole or some of the 30% portion too.
- Invest your Saving
Now that you can save a good chunk of money every month, where to put that money? Well, you can choose to save in your account or to invest somewhere to earn the profit over this investment. Investing in gold, mutual funds, or saving certificates is always a good idea, rather than letting the money rot in your treasure box.
But we recommend you to know all the details of whichever saving method you choose to avoid any mishap or confusion.
- Switch from Credit Cards to Cash
Keeping those shiny credit cards might seem fancy, but it will cost you more money than required most of the time. When you shop using credit cards every time, you can’t keep track of your spending and will run out of budget. Keeping cash in your wallet and shopping in cash will make you conscious while spending, and you will save more.
- Skip Your Vacation this Year
We understand that annual vacation is a good way to get away from the monotonous routine for some time. But a fair chunk of your savings goes to this vacation plan too. So, to save money for your new home, you might have to sacrifice the vacation this year. In this way, you will save that chunk of money and will be able to buy a home earlier.
Cutting down on seemingly trivial expenditures, proper budgeting, and wise spending can help you save money for your first home. Try to switch from credit cards to cash and plan to skip your vacation this year so that you can buy your dream house soon!