The thoughts of saving to buy your first home can be enough to make anyone a little apprehensive. Buying a home is expensive and there are a lot of other costs to consider other than the sale price of the property alone. Having your finances in order and enough savings in the bank to navigate the home-buying process will help everything to go as smoothly as possible.
For most people, when you decide to buy your first home, you will typically need to save for a number of years before you can start seriously looking around. Saving as much money as possible is key in increasing the range of properties that you might be able to afford. With a few small changes and through the development of new financial habits, you can put strategies in place to help you start saving for your first home.
Let’s take a look at a few tips to help you to save more money when you are preparing to buy your first home.
Understand Your Spending
Managing your spending is crucial in keeping your costs down which will allow you to save more. Knowing how much you are spending on different expenses will help you to identify where you can cut back and save. Your morning coffees could be adding up to more than you realize. Or your weeknight takeaways might be more expensive than you thought. Using a budget tracking app, you can identify where you can cut back on your daily expenses and add to your savings.
Mind The Pennies
As the old adage goes ‘mind the pennies and the pounds will look after themselves’. When it comes to saving money for a new home, every penny counts and you might be surprised at how much your spare change can add up to overtime. Make a rule that you won’t spend any change and instead put every bit of change you have into a jar. If you are paying online or with a card, there are different apps that you can use to round your spending up to the nearest dollar, depositing the difference to your savings account. These small changes can make a big difference in your savings goals.
Set A Realistic Budget
While you could live on baked beans for the next year or two to save on your grocery bills, the reality is you are not going to go to these lengths to save. Take some time to sit down and figure out a realistic budget that you can actually stick to each month. This will show you how much you can save each month and allow you to put a savings plan in place. Reaching milestones in your savings plan will help to keep you motivated to continue saving for your new home.
Separate Your Savings
Choose a high interest saving account to hold your savings so that you can earn interest on the money you put aside each month. Having a dedicated account for your savings will help you to manage your savings more efficiently and be consistent with your goals. If your bills and personal expenses are coming from the same account as your savings, your money will get mixed up and you will end up dipping into the money you have saved, dwindling your savings down over time. Instead, choose a high interest account that you don’t have a debit card for and that allows limited or no withdrawals. Keeping your savings separate from everything else will ensure that those funds are always out of sight and out of mind so you avoid temptation.
Set Up A Successful Savings Plan To Buy Your First Home
To stay on track with your savings, you need to have goals in place and ensure that you remain consistent. With the right approach to saving, you can start building your savings account now and be ready to buy your first home when the time comes. Setting up an effective savings plan from the outset will help you to generate more savings in less time so you can start looking for your new home as soon as possible.