Homes are expensive, and that’s not going to change anytime soon. Since the real estate market collapsed in 2008, it’s been difficult to secure a home mortgage at as low of a rate as one used to be able to get. As a result, it’s increasingly important that potential home buyers are able to save up the necessary capital to purchase a home with a reasonable mortgage deal. While it takes a combination of hard work, persistence, and diligence to save up enough money to buy a home, it’s 100% worth it.
With that, here are the most important things you’ll have to do to save up for a house:
1. Mastery at your profession
The better you are at your job, the more money you’ll make, and the more you’ll be able to put away for a home- it’s that simple. The amount that you save is equal to the difference between the amount you make and the amount you spend, so by increasing the amount you’re making, you’ll naturally save more. While this may seem like unnecessarily basic advice, it’s important to drive a good deal of effort towards your work itself.
2. Become financially literate
Having a financial education, unlike a college degree, requires almost no money and very little time. By educating yourself on financial principles such as interest, debt, markets, and timing, you’ll be better equipped to save for the home you’ve always wanted. There’s a wealth of free online resources on this, much of which will be helpful in guiding you down the right financial path to the right home.
3. Buy less toys
Yes, sadly, buying too many toys (proverbial or otherwise) will severely hamper your ability to save up for a home. This can be done in small steps by slowly cutting down your extra expenses and allocating a set budget for leisure. Sticking to this budget, whatever it might be, will allow for a great deal of mental ease when it comes to the home-buying process.
4. Pay off your debt- quickly
If time is the greatest aid to wealth, what’s the biggest enemy? The answer, while extremely common in the financial sector, poses a grave threat to those hoping to save: debt. It can be extremely difficult to build wealth if you’re caught up trying to pay off past debts, so saving up to pay them off as quickly as possible is 100% in your best interest, especially if you’re hoping to buy a home.
5. Invest
As a rule of thumb, consider investing at least 20% of your income in real estate and stocks, two of the safest investments (if done with a degree of forethought, planning, and due diligence). By allowing compound interest to work in your favor, you’ll be able to build wealth at a rate that would be near-impossible without investing.
6. Keep a budget
It can be difficult to curtail your spending if you don’t have a clear idea of how much you’re actually saving, so keep track of your finances. It can be hard to look at times, much like how people will avoid going to the doctor for fear of receiving bad news, but there are few things more important to the overall well-being of your financial portfolio than looking at and updating your budget.
Source: Inman