How to Start Saving for a House

Owning a home doesn’t come cheaply, but a solid saving plan makes it achievable. So, how much money should you save before buying a house? If you’re a first-time home buyer, you need to make between 3%-20% of the purchase price as a down payment. The only exception to buying a home without a down payment is the U.S. Department of Agriculture or Department of Veteran Affairs loans. Additionally, you will incur between 2-5% of the home’s value on closing costs. You also need to factor in moving expenses—which vary depending on where your house is and how much stuff you have. On average, local moving costs $1,500 while distant moving costs $4,000. So, are you ready to start saving for a house? Here are a few strategies you can use to stay on track toward owning your dream home.

Create a Budget

Budgeting is a sure way of putting your finances in order and getting started saving for your home down payment. The first step when creating a budget is to determine your monthly net income. Once you know your monthly take-home pay, list all your expenses (both necessities and non-essentials) to track your spending. Necessity (fixed) expenses include rent, utilities, loan repayment, savings, insurance, food, and transportation. Non-essential (variable) expenses include entertainment, gifts, and traveling. To ensure you have more income left over, regularly adjust your fixed and variable expenses. You can do this by looking for expenses that you can cut back and channel the money to your home kitty. If you find budgeting overwhelming, you can use a budgeting app or seek help from a financial advisor.

Find a Side Hustle

We all have leisure time, and how we spend it makes the difference. In your free time, you can decide to pick up a side hustle that can put more money into your home-saving kitty. If you love animals you can get started by pet sitting while the owners are away for business trips or vacations. Another lucrative gig is working with rideshare companies on weekends or at night depending on your schedule. These are pick times and clients can pay more per mile, earning you more cash. If you are a wordsmith, freelancing is a perfect side hustle. You can find and work with individuals and businesses that need copywriting, product reviews, guides, or app and website testing services. For instance, you can earn handsomely by writing curated online gaming guides to help punters find the best casino sites in Australia. On these sites, you will write reviews of pokies and gaming platforms, as well as rate bonuses that players can claim while signing up.

Downsize Your Lifestyle

Living below your means can help you save more money toward your home purchase. This means you only spend money on needs and divert the extra cash into your savings. You can downsize by moving into a smaller and less expensive rental or neighborhood. If you don’t want to relocate, you can get a roommate to split the cost of your current apartment. You can save up to $3,600 annually for cost-sharing rent. Another way to practice minimalism is by living with family or friends as you save for your dream home. If you have an extra vehicle, you can rent it out or sell it and re-invest the money. If you have an extra bedroom or a parking space you don’t use, consider renting them out, too.

Forego Bad Habits

Unhealthy financial habits like impulse buying and eating out can cost you thousands of dollars annually. The good news is that you can quit these bad habits and divert the money to your savings account. Foregoing takeout and fast food can ease the pressure on your wallet. Consider cooking your meals at home and bringing it to work. This way, you’ll save on eat-out and delivery fees. If you are addicted to in-person or online impulse buying, unsubscribe from marketing emails and avoid visiting high-end stores. Once you stop seeing lucrative offers, you can reduce buying things you don’t need and save some money. Another way to cut down bad habits is making your money less accessible—automate your savings. Authorize your bank to automatically transfer a certain amount from your primary account to your dedicated savings account.

Skip a Vacation

Who doesn’t love going on vacations? While exploring new destinations helps you forget the hassles of life, it’s an expensive adventure. Instead of spending a big chunk of cash on vacations, you can save that money by exploring your local sites. Search for historical sites like museums within your locality that are free or charge a small fee. You can also join low-cost classes at nearby resource centers to learn about artwork or cook new dishes. You’ll experience the same joy of trying something new, at a bargain.

Start Saving for a House Today

We all dream of owning a home, and we can achieve this dream by making a solid savings plan. Saving for a house requires a budget to help you track your expenses and cut down on what you don’t need. This way, you can create a minimalist routine and save more money for a home down payment. By Chris Bates