To buy a house is not just a matter of comfort but a significant financial endeavor. One of the biggest problems for people looking to buy a house, especially young people, is the lack of money or the inability to save money to purchase their home. Many young couples are fighting to purchase their first home. That challenge forces them to change spending habits and save more money.
To succeed in savings to buy a house, future home buyers have to work very hard on the following:
Start savings early (years before reaching homeownership),
Save a lot
Saving to buy a home requires time and sacrifice. It requires a good knowledge of the savings options and routes. Yes, it requires us to divide the money between current expenses and savings.
Some people take the Do It Yourself (DIY) route to becoming homeowners. They will read, network, and learn how to accomplish their dream. Another path to homeownership is hiring a financial coach or financial planner to create an action plan. The benefit of a financial coach is the increased accountability that comes with another set of eyes on the process.
Whether homeownership way, DIY or with a financial coach, the first thing to do is produce a suitable financial plan. The plan should include the funds available to us, personal or from others. Develop an ideal budget that consists of savings for the downpayment. To speed up the savings rate and achieve homeownership faster, there is the option to reduce spending as much as possible, for example, cutting cable TV and streaming services, reducing spending on entertainment, reducing spending on a car, and everything else. Once you have the numbers for the financial inventory and savings rate, it's possible to create a timeline for homeownership.
There is a saying that it takes a village to raise a child. The same is true for homeownership. Parents or other relatives can be supportive on the path to the dream of homeownership. That support can come from staying with relatives to eliminate rent expenses, increasing the savings rate, or straight financial aid.
With a financial plan to reach homeownership, the next step is to decide where to save the money. It would be best to shop around among credit unions, banks, and savings apps to find the best saving plan that offers the highest interest rates.
The most challenging part of this homeownership plan is to reject instant gratifications. Whether it says to give up on things we love to buy, like a nice late cup, or about things we want but can do without, keeping the car for additional years and shop less at premium supermarkets until you reach your savings goal. Each immediate gratification postpones the dream of homeownership.
And lastly, even if we set a certain percentage of income as savings and decide to "pay ourselves first" right after receiving the salary and before all the expenses, it does not mean that we can not earn more. There are multiple ways to increase your income after hours or over the weekend with the gig economy.
In conclusion, it's possible to reach the dream of homeownership faster with a plan and sticking to it. Share your plan with others for feedback and accountability.