Mortgage rates are rising. The cost of living is rising. And house prices are rising. In fact, since the pandemic, house prices in the USA have increased more than 40%. There is a harsh reality facing new homeowners today. It is undoubtedly harder than ever to get on the property ladder.
However, there are still many ways that new homeowners can tactically improve their saving strategies as they save for their first home.
Before doing so however, it is important that potential new homeowners have a saving target. Everyone’s goal will be different, depending on financial and personal circumstances.
Begin the process by doing your own research on house prices in the areas in which you want to live. Can you save for a 5% or 10% deposit on your potential new home? What mortgage repayments can you afford each month? Remember to factor in the other costs, such as admin fees, when creating a saving target.
Once you have created this goal, consider the ways in which you can save towards it. Below is a list of ways that can help.
Check on your Providers
A good place to start when looking to save is checking on your energy, internet, heating, and phone providers. You could be spending too much money on some or all of these when there are cheaper deals out there.
Beginning by checking in with your providers. Inquire whether there are any better deals available. If you are paying for a premium internet and streaming service, see if there are downgrades available that you could live with. If your current providers don’t offer better deals, you could research other providers that might offer the same services at a cheaper price.
Start a Budget
When looking to save, creating a budget is absolutely necessary. Sit down and calculate your monthly ingoings and outgoings. Creating a budget allows you to closely keep an eye on your spending so that you can more easily find ways to cut back.
When you know exactly how much you are spending per month, and where the money is going, you’re bound to find ways in which you can save. You’ll suddenly find a streaming service that you are paying for but don’t use.
When budgeting in general, a good rule to adopt is the 50-30-20 rule. This is 50% on necessities, 30% on wants, and 20% on savings. However, you can always adjust this as needed, especially as you are trying to save for a home.
If you are new to budgeting, consider the many budget apps available online. They will help as you move towards that saving target.
Consider your Living Situation
Rent will take up a great deal of your budget. And there’s no getting round the fact that you need a place to live. However, it is worth considering whether you can change your living situation to help save on rent.
For example, you could consider moving home with your family for a while. While not an option for everyone, doing so will save a great deal of money on rental costs.
Or if you are living alone, consider moving into shared accommodation or getting a roommate. Living with multiple people can mean serious savings on rent,bills, and food.
Take on Extra Work
If you have the time and energy, you might consider ways in which you can earn extra income when saving for a home. Time on the weekends? Try looking for a part-time weekend job such as babysitting. You might not make much, but every little helps when you are saving for a home.