You’ve decided 2023 is the year to ramp up your home-buying savings. You’ve finally zeroed in on one of the adorable bungalows you bookmarked online. To do that, you’ll need to make a down payment, which nearly three-quarters of millennials say is the biggest hurdle to home buying, according to a survey.
But there are plenty of ways to put less than the traditional 30% down for a house, as long as you weigh the potential trade-offs. You can also use savings strategies to boost your reserves. Here’s how to make homeownership happen in 2023. A few tips on how to save up for a dream home are as follow;
. Draw a Budget, and a Reliable Savings Plan
Review all your credit card payments, bank statements, and every other account to know where your money goes. That will lead you to know how much you spend on the necessities and how much goes into unnecessary subscriptions.
With this knowledge, draw a workable savings plan, and stick to it. It would help if you considered opening a house-buying savings account and allocating a percentage of your salary that goes there. Making it a non-optional expense will help you focus.
. Minimize Your Expenses
Minimizing your expenses and downsizing are the fastest methods to save for a significant purchase like a home. Look around the house and see any recurring purchases, subscriptions, or expenses you can do without, or reduce and channel the savings to your house-buying account. You can also move into a smaller house or sell that extra family vehicle, or cut the cord on your cable television.
. Upgrade skills to increase income
Spending less is one way to save more. Another is to earn more. You may consider upgrading your skills to get a job raise or promotion. Moreover, if the place you work at allows you to earn a secondary source of income, there’s plenty you can do to boost it. Not only will you earn more money to buy your dream home, but you will also be happy doing it as it’s for a defined goal.
. Invest Windfalls
Consider investing every unexpected sum you get back into your house-buying account. These may include tax refunds, work bonuses, and more. Again, it may be tempting to access some of the extra funds. As a result, restricting access to your house-buying account will make the savings safer.
. Grow your money with a CD
Finally, look at building up your diligently saved money. The stock market can rise and fall drastically in the short term, so it isn’t wise to invest your savings in stocks if you want to buy a home soon.
But your funds don’t need to languish in a traditional savings account with low interest, either.
Consider a certificate of deposit. A CD locks up your money for some time, generally from six months to five years, for a higher rate of return. If you can deposit $5,000 for a five-year term, you could find CD rates as high as 2.05%. Some one-year CDs with $1 minimum deposits can earn 1.70% interest, which is higher than that for most savings accounts.
. Find an accountability partner
Whether it’s your parent, spouse, or close friend, having someone to hold you accountable is a great hack to avoid slipping into bad habits. Whoever you choose, tell them about your plans to buy a house and ask them to check in with you regularly to ensure you’re on track. While you can’t save for a house in a year, you will certainly be able to pull it off in a few years if you have someone looking out for you.
. Invest in a Property that has a High ROI
Consider investing in properties that are still under development. When you buy a property that is still being developed, you get a higher return on interest. You should also research and identify land/properties that have upcoming facilities like airports, flyovers, and malls. Over time such investments generate the best return! As it may not be prudent to buy a house or land in cities due to skyrocketing real estate prices – you should look for properties on the city’s outskirts. You may also purchase commercial property investment to generate a second source of income.
