We all dream of one day owning our own house and decorating it however we want. However, for many young people, owning their own home seems like an unattainable goal.
Saving up enough money to buy a home while paying apartment rent is a daunting challenge, but it isn’t impossible. Learning how to save for your first house is the key. Here are five steps to get you started.
1. Figure Out How Much a Down Payment Costs
We know many people are out there looking at house listings and admiring the photos. Rather than just browsing the pretty pictures, start looking into the average home prices, mortgage requirements, and downpayment percentages.
Knowing the average house price in your ideal neighborhood and the required down payment will give you a clearer idea of how much to save. Make sure to look into mortgage rates and other financing options as well. The more information you have, the better you can budget and set a savings goal.
2. Open a New Savings Account
Once you know how much money you need, you can start saving up. Opening a dedicated savings account is an excellent way to automate your savings each month.
You can set up automatic transfers from your payroll account to ensure part of your money is safe. This way, you won’t accidentally spend your house-buying funds on other things you want.
Moreover, a high-yield savings account can keep your funds growing bit by bit thanks to the interest earned.
3. Save Up Excess Funds
There are times when we get windfalls. When you do get unexpected cash, save it up! Control your urges and avoid splurging your windfalls on the small stuff. If you’ve done your budgeting well, you should have enough funds for daily and monthly necessities.
Use your new house-buying savings account to put away your extra money safely. You know yourself best, so if you think you might access that excess cash for any reason, you can restrict withdrawals on that account.
4. Slowly Pay Off Debts
Almost everyone has debts—student loans, credit card debts, personal loans, and more. When you start saving up to buy a house; you should also slowly make your way through paying your debts.
List down all your debts and prioritize what to pay off. Then, make sure to include it in your monthly budget for expenses and savings. Small payments each month might not seem like much, but it can help you slowly pay off debts one by one.
Paying off debts is hard. Just remember that it will be easier to focus on your house down payment savings when you’re not focusing on debt repayment.
5. Start Downsizing and Living Lean
If you’re saving up for your first house, you need to cut down on some luxuries. A daily cup of coffee from your small coffee shop might not seem like much, but the expenses accumulate over time.
Look at your monthly expenses and see where you can cut back. Strong candidates to eliminate are gym memberships, cable television, and frequent nights out drinking. Do it slowly and one by one to help keep you on your downsizing path.
If possible, see if you can move apartments to a smaller one or find a roommate to help shoulder the costs. You can also try looking for additional income sources.
Saving money for your first home is a marathon, not a sprint. It can take years of effort and determination. As you save up and budget tightly, don’t be too hard on yourself for small slip-ups. Forgive yourself, steel your resolve, and save more next time.
These helpful tips were brought to you by Glen Lennox, a charming apartment community offering cottage-style homes for rent in Chapel Hill, North Carolina.