Savings Strategies Every First-Time Homebuyer Needs To Know

Savings Strategies Every First-Time Homebuyer Needs To Know

If homeownership is one of your future goals, you're likely focusing on building your savings. A key priority is having a plan for expenses like closing costs, down payment, and other related costs.

Here are a few strategies to help accelerate your savings process.

Budget and Track Your Expenses: To start, create a detailed budget that tracks your income and expenses. This will give you a clearer view of your overall financial situation.

Cut Down on Unnecessary Spending: Now that your budget is complete and you have a clear picture of your spending, look for non-essential expenses you can cut. Redirecting that money toward buying a home can make a significant difference. Even small savings can add up. As the National Association of Realtors (NAR) says:

“The majority of first-time buyers did make financial sacrifices to purchase a home. For those who did, the most common sacrifices buyers reported were cutting spending on luxury goods, entertainment, and clothes.”

Automate Your Savings: Once you've determined how much you want to set aside for your homebuying budget, make the process easy. Manual transfers can be forgotten, but setting up automatic transfers ensures consistency and removes the temptation to spend the money elsewhere. Realtor.com explains:

“If you’re struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank . . .”

Lean into Any Side Hustles You Have: Do you have a gig you do (or have done before) to earn extra cash? Taking on part-time work, freelance jobs, or a side hustle can help boost your savings.

Put any Unexpected Cash To Good Use: If you receive any sudden windfalls, such as a tax refund, bonus, inheritance, or cash gift from family, allocate it to your house fund.

By applying these strategies and consistently focusing on your savings, you'll be well on your way to securing what you need to buy your first home. As Ramsey Solutions says:

“Budgeting shows your money who’s in charge (that’s you). It gives you the power to tell your money where to go instead of having to wonder where it went. It’s how you make any money goals happen—like saving for a down payment.”

Bottom Line

If you need more strategies for getting ready to buy, let’s connect.