June 23

Savings Guide: Buying Your First Home

Personal Finance

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If you’re hoping to buy your first home someday soon, don’t be overwhelmed with the prospect of saving enough money. Putting money away for home buying doesn’t have to be done in large sums all at once.

In fact, people who add a little here and a little there using the tried-and-true techniques described below are often the ones that accumulate the largest savings when it’s finally time to take that home buying leap. Most of these tips don’t require any significant life change at all.

To help you comfortably prepare for buying your first home, here are some easy ways to save more money towards that goal.

 

Tracking and Organizing Your Spending

The first, most annoying, and predictable change that must be made is a thorough evaluation of your finances. But this has the potential to be one of the easiest steps towards buying your first home!

Your first step would be sitting down and figuring out where your finances are headed right now, and calculating how much you may want to save. Once you begin tracking where all your money is currently being spent, the fun part begins. Ironing it all out.

This can be done with a financial advisor, online finance organizers, or even just by hand on a spreadsheet, you create!

Set aside time to make some calls, get all your spending into one place, and decide from there how you can increase your savings. Which avenues can you reduce spending in, what services could you possibly cancel? Are there services that could be made cheaper through another company, or are you eligible to refinance?

When all is said and done, you are now able to put those same funds towards your home savings instead. Getting a hold of your spending NOW will go a long way for your future.

Eliminate Debt

As you are adding up and organizing your monthly spending, you’ll no doubt notice how much of your hard-earned cash goes towards paying off some debt or another.

It’s not fun to say, but this will be the first spend you’ll need to tackle.

You can easily put more money towards a house (and it will look significantly better on your credit) once you’re free from paying interest on your debt. Consolidating debt with a personal loan or line of credit is just one option for consolidating debt.

Eliminate Unused or Barely Used Expenses

Yes, we know it’s not exactly what you want to hear, but it’s what you need to hear my friend!

How much are you paying for your Direct TV, the membership to your local gym, buying lunch or a latte every day, etc? Cancel and eliminate these expenses from your monthly expenses and. instead, put that beloved money towards your goal of buying your first home.

 

Don’t Pocket Your Raise

We all love raises because, to most people, it means play money, right? More money to spend on the fun stuff.

But if you’re serious about buying a home, you’ll need to treat raises as money that goes directly into the account helping you with this goal – no questions asked.

 

Don’t Blow Your Tax Refund

View your tax refund the same way as you will now view your raises. Simply redirect every penny of your tax refund to your savings account. This is easier said than done, of course, particularly for those of us living paycheck to paycheck. But you will be patting yourself on the back in the future for making this wise decision.

 

Any Extra Money You Receive Goes “You Know Where”

Seeing a trend here? One of the simplest ways to save more money toward a goal toward buying your first home is by redirecting extra funds received outside your regular income to your savings – prize money, Christmas bonuses, inheritance money. If you can get into the habit of doing this, you won’t even miss the money because it never entered your personal checking account in the first place.

Simple psychology.

 

Have a Separate Savings Account or App

If you are quite the spender and not a great saver, you should start by putting your home savings into an account you can’t touch! That way you are never tempted to use your savings for other things (except emergencies if need be).

Consider setting up an automatic transfer from your checking account to a savings account that’s separate from your checking account.

If that doesn’t tickle your fancy, consider a savings app like Digit. Here, you can set up a savings goal that includes setting a date to reach a specific dollar amount. The app will then take a certain amount of money out of your account daily. This could mean .12¢ or $5. No matter, it’s an easy, hardly-noticeable way to save money without manually moving money over to savings and feeling sad inside…

I see no downside here, do you?

It is fairly easy to save an extra $500 per year with the proper planning. Make your savings goal even bigger, if you’re trying to get your home sooner. These savings tips are adjustable to what you are looking to achieve with your home buying venture.

 

Make A Small Increase To Your Savings Account

Even just the smallest of increases to your savings can help boost your savings account for your future home. When it comes to saving money, no matter what the reason or circumstance, a little goes a long way.

A great way to do this is by simply adding 1% to what you’re already saving. It’s likely that you will barely notice the change in your personal month-to-month finances and that 1% is likely to yield a near 6% annual return. That’s a huge difference.

 

Begin Your Credit Repair Process

Savings is one massive step towards getting your first home, but an almost more important step is making sure your credit is ready to go. If you’re planning on pulling out a home loan to fund most of your home, your credit is going to matter.

The very first step in this process is to review your current credit reports. What negative items are weighing down your credit? What positive history have you already established? This is the beginning step of building your map toward a great credit score.

At Credit Innovation Group, we’ll pair you with your own personal credit specialist to assist with the many products and services that our membership provides. With your CIG Membership, you will learn how to manage your credit profile, organize your budget to maximize your cash flow, and become approved for new credit accounts.

With our help, and the help of this savings guide, the goal of your new house and strong budget are just within reach. Here’s How It Works.

 

More From CIG:

What is a credit score?

What is credit?

 

 

Author 

Leah Roberts

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