Savings Strategies Every First-Time Homebuyer Needs To Know

If homeownership is a future goal, prioritizing your savings is essential. Make sure you have a solid plan for closing costs, down payment, and other related expenses.

Budget and Track Your Expenses: To begin, create a detailed budget that tracks your income and expenses. This will provide a comprehensive view of your overall financial situation.

Cut Down on Unnecessary Spending: With your budget in place and a clear understanding of your spending, identify and eliminate non-essential expenses. Reallocate this money toward buying a home, as even small savings can add up significantly. 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 know how much to set aside for your homebuying budget, simplify the process. Set up automatic transfers to ensure consistency and eliminate the temptation to spend the money elsewhere, avoiding the hassle of manual transfers. 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 or side hustle for extra cash? Taking on part-time work, freelance jobs, or additional gigs can significantly 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, direct them toward your house fund.

“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’re looking for more strategies to prepare for buying a home, let’s connect.