1. Make a Budget and Track Every Penny
We’ll start here because even some people who are otherwise smart with money don’t keep a budget. They just don’t realize the benefits of simply writing things down. It can really put things into perspective.
After you get it on a paper, in a spreadsheet, or into an app, ask yourself some important questions.
- Where am I spending my money?
- What am I willing to do without for a short time to save faster?
- Where am I overspending?
And make the change.
2. Figure Out How Much You Need
You must set goals in order to achieve them. Otherwise, it will take much longer than it should.
Ask these questions:
- What financing options do I qualify for?
- How much home do I need?
- What does that home cost?
- How much do I need to put down?
Bonus: It’s always good to save an extra 5-10% for any immediately needed repairs or costs that may come up.
3. Decide Where to Keep Your Money
This is important. Putting your money in the wrong place can cost you. If you want to buy a home in the next 1-5 years, your money should be in a savings account or money market. If you have a longer horizon, a CD may be a better option. But we don’t want to see you get hit with penalties, so make sure you know of any minimum balance requirements or early withdrawal stipulations. You’re money definitely does not belong in risky investments like the stock market. Since you will need it soon, you run the risk of a short term decline in the market at a very bad time. This could force you to wait for it to go back up and lose your dream home.
Saving for a New Home
It’s amazing how you can build momentum when you just start moving in the right direction. Know where your money is going, cut back where you can, set goals and put your money in the right short-term location. And we hope to see you in your new home soon.