7 Tips for Saving Money To Buy a House

Buying a house is the biggest purchase and investment most people make in their lifetimes, and it's important to be prepared for it. It's essential to have a solid savings plan in place. It takes time, discipline, and effort to reach your savings goals. If you put the right strategies in place, you can reach your goal and become a homeowner. In this blog, we'll cover 7 tips and strategies that can help you reach your savings goals so you can buy the house of your dreams.

1. Create a Budget

Creating a budget is the first step in grabbing the financial bull by the horns to control your money. It paints a picture of all the income you have coming into your account and all the money going out of your account. This step is important because it helps you identify areas where you can cut back on some of your unnecessary spending.

To create a budget, write down and list all your monthly income sources, including your salary and any side hustles or gigs. If you have any tech savviness, create a spreadsheet

on Excel or Google Sheets to keep things more organized. After you list all your income, list all your monthly expenses, including housing, food, utilities, transportation, entertainment, and other costs. Finally, subtract your monthly expenses from your monthly income to determine if you have a surplus or deficit. If you have a deficit, you'll need to find ways to reduce your expenses or increase your income. Let's use an example.

Joe Partyboy likes to go to the club every weekend. He plans on getting married next year and his fiancee wants them to buy a house, because she refuses to pay someone else's mortgage by paying them rent. This means Joe has to start saving more money to cover his half of their downpayment. Joe's fiancee tells him to stop clubbing so much so he can grow his savings faster. Joe can't seem to give up his weekly club visits, so he becomes a bouncer/ bar tender at his favorite club. Now he can at least get paid for being at the club.

It's a silly example, but with some creative thinking, most people can figure out a plan to trim some of the fat from their expense sheet, or at least increase their income by creating another revenue stream. Let's look at some other examples below.

2. Reduce Monthly Expenses

As stated above, reducing your expenses is one of the easiest ways to increase your savings. Take a close look at your budget and identify areas where you can spend less. Maybe you can reduce your food bill by cooking at home so you can cut back on eating out. If you've been thinking about quitting smoking or drinking, let your goal of saving money to buy a house be your motivation to do so. People can easily spend between $150-$200 a week or more from smoking and going out for drinks. If you don't have any habits you're trying to kick, you can save money on entertainment by opting for free or low-cost activities, such as hiking or inviting friends over for game night.

3. Increase Income

Increasing your income is another way to boost your savings. If the example I shared earlier of becoming a bouncer or bartender isn't for you, consider taking on some other part-time job or start a side hustle and become an Uber driver. You can also sell items you don't need like that comic book or creepy doll collection. If you have a special skill or hobby, you can turn it into an income source by doing gigs on sites like Fiverr and Freelancer, or you can offer classes or sell your products online.

4. Invest

Investing in stocks, bonds, and mutual funds can help you grow your savings so you can reach your financial goals faster. Investing can be intimidating, but there are many resources available to help you get started. You can start with a low-cost index fund, which offers a

diversified portfolio at a low cost. As you become more comfortable with investing, you can consider adding individual stocks or other investment options to your portfolio. If this is over your head, ask people you know, like your Realtor, for a referral to a financial advisor that can help you choose wise investments.

5. Pay Down Debt High-interest Debt

Creating a plan to pay off high-interest debt should be at the top of your to do list. High interest credit cards can easily create road blocks to keep you from growing your savings. Make a plan to pay off your debt by focusing on the debt with the highest interest rate first or consider consolidating your debt into a lower-interest loan.

6. Automate Your Savings

Automating your savings is a simple and effective way to reach your financial goals. Create a new savings account and treat it like a Christmas Club account, where a percentage of your paycheck gets direct deposited into this account. You can set it and forget it. After some time, you could have a significant amount of money put aside.

7. Shop Smart

Smart shopping is another way to save money. Take advantage of sales and discounts to buy items. Clip coupons for items you use or buy a substitute items you have coupons for.

If you use a credit card, make sure the card gives you reward points on gas or groceries and make sure to pay the balance off every month. Put the money you were going to use to pay for these items aside to ensure you don't carry a monthly balance.

These tips may not sound like a big deal, but it could turn into hundreds, if not thousands of dollars in savings at the end of the year.

In conclusion, buying a house requires a lot of planning and saving. With a little creativity, most people can build on these 7 tips, and be well on their way to reaching their savings goals and becoming a homeowner.