New Year’s Resolution: Tips on Saving for a New Home

 

It’s that time of year again, where you can reflect on everything that you have encountered throughout the past 365 days. Ask yourself, what worked? What didn’t work? And most importantly, what is your New Year’s Resolution going to be for 2018? For many, buying your first home is the first thing that comes to mind. In this article, Professional Realty Associates will provide you with helpful hints on saving up for that resolution.

 

Set & stick to a monthly budget:

If you haven’t already done so, we highly recommend sitting down and constructing a realistic monthly budget. By doing so, you may become more aware of your own “personal flow” of income, which can be helpful in knowing how much you can potentially, and realistically save. Calculate approximately how much you spend each month, and then sift through all of your expenditures to find the ones that are expendable, and more importantly the ones that are necessary. After doing so, cross reference your total monthly income with your total NECESSARY expenditures. The difference between the two is your gross income. Set a fixed percent of your gross income to savings - while there isn’t a fixed percent that needs to be followed, a higher percent will result in a shorter time frame to save up for a down payment on your home, which we will discuss later. The rest of the money can be used at your disposal!

 

Example

Total monthly income = $2,000

Total necessary expenditures= $1,000

Gross Income = $1,000 ($2,000-$1,000)

Fixed percent (50%) of Gross income to savings = $500 ($1,000 x .50) 

 

Calculate how much you need to save for a down payment:

Once interested in purchasing a home, it would be beneficial to sit down and to discuss your options with a Home Financing lender. During the meeting, find a monthly payment that you could comfortably pay each month. You can then calculate the down payment required to purchase the home. This will be your target amount to save up for. 

 

Create a separate savings account:

Often times, it is easy for most people to hoard all of their money into one account. Seeing multiple zeroes in your account provides a sense of security, but can also welcome unwise spending habits. Opening a new savings account will not only allow you to hold yourself accountable for the growth of the account, but also provide you with higher interest rates as opposed to your standard checking account. And who doesn’t like free money? Am I right? 

 

Save 100% of windfalls:

Windfalls can be categorized as an unexpected profit or gain. Examples of windfalls include tax refunds, gifts, year-end bonuses, etc. The idea here, is to stash away windfalls into your private savings account and act like you never had possession of it. This will slash down your down payment goal in a matter of no time.

 

Set a realistic time frame:

You need to be honest with yourself in terms of how long it will take you to save up for the down payment. Set a realistic time frame, and hold yourself accountable. Stick to the plan!

 

Cut yourself some slack:

Don’t punish yourself. It is not uncommon to feel frustrated or under stress while saving for a house. However, if you feel like every single day is a battle, then it may be wise to expand your time frame on buying a house and save in smaller amounts.

 

By setting forth a plan in which you utilize a few of these helpful tips, you will be one step closer to making this year your best one yet! Just remember, if you are in need of assistance, results matter with Professional Realty Associates & Pilgrim Team!