Like many people, you might be confused about how to materialize your dream of becoming a homeowner. It may not be easy to pinch pennies and gather the money for the down payment on a house – the initial price you pay to purchase a property. Additionally, saving money can depend on several factors like your salary, loans, and other responsibilities you may have. However, with the right strategies, while having a firm objective in mind, you can transform how you manage your expenses.
Here are a few tips and tricks you can follow to save money for your ideal house:
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Open A Savings Account
To make your money grow with time, you should consider opening a savings account as soon as possible. This is especially important as a savings account will help you earn compound interest on your deposits. If you’re not looking to buy a house in the next few years, you might want to look at a longer-term savings account. An account like this will pay you more interest which will work in your favor since you won’t be needing the money straight away.
Another way to save money more quickly is to automate your account on a monthly basis. This small step will stop you from spending your money on unnecessary items since a part of your paycheck will automatically go into your savings account.
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Start Saving Early
You might have heard or read that buying a house can be quite expensive, and it may take a lot of time to gather the funds for it. This may be true if you’re thinking of buying a foreign property. However, if you start saving from a young age, buying a house can be surprisingly affordable.
Some countries like the UK or Singapore charge a greater tax percentage to foreign investors and buyers. Although fortunately, if you’re a permanent resident, Singapore properties can be extremely economical. This is especially if you’re buying your first property; the ABSD they normally charge is non-existent. Thus, if you’re a young resident in Singapore, buying your very first house can be an easy process.
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Create A Budget
Before looking at houses, you should know the amount you can actually afford, depending upon your income and expenditure. After you’re done with this step, you can then decide on a target that you want to achieve. This will require creating a reasonable budget that aligns with your savings goals for a down payment. Furthermore, take into account the time and effort that would be required to afford your dream house. Start the budgeting process by looking at the amount of money that enters and leaves your bank. In simpler terms, your earnings vs. your spending. Don’t forget to incorporate any other source of income you may have in your budgeting strategy. To create a realistic budget:
- Monitor your fixed expenses like rent, utilities, or any other bill.
- Decide the monthly amount you need to deposit in your savings account.
- Figure out the remaining amount that you can spend on additional necessities like groceries.
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Focus On Needs Instead Of Wants
It may be hard to believe, but the little luxuries we think we can’t live without adding up become a significant amount. Thus, cutting out these desires from your everyday life or temporarily putting them on hold can contribute to your savings.
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Pay Off Your Debt
If you plan on purchasing a house with credit or by borrowing a bank loan, a good credit history will play a crucial role. Paying off any outstanding debts you may have is just as important as saving money. Without a good credit score, it will be difficult to find a bank willing to lend you money and, even if you do, the interest will be significantly high. Thus, paying down some of your debt will help you secure a better mortgage rate.
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Additional Jobs
Juggling two jobs simultaneously might not be easy for some people. However, if you work a typical 9-5 job, you can try to squeeze in a couple of hours for a side hustle that can become your additional source of income. Therefore, branching out by finding a new job or starting a profitable business can help you save money faster.
These are some of the tips and tricks we gathered to help you save and be able to afford your ideal house sooner than you expect it. If you have a goal of buying your dream house in your mind, saving money becomes easier. Thus, by following a well-planned strategy, you can speed up your timeline of purchasing a home.