Money-Wise in 2022: Saving For Your Dream Home
The New Year has arrived and with it comes hope for the future, for good health, for financial wellness and for many, goals of buying a home. However, with inflation rates on the rise, the cost of living is getting higher at an alarming rate. Many are now finding it more difficult than ever to put money aside for the savings during this time. This can make one's hopes of buying a house seem dim.
Don’t let the light burn out just yet though. Buying a house is a big commitment that requires lots of planning, saving, and hard work to achieve. Particularly in the dynamic market we are faced with today, it can be difficult to know how to save, and how much you need to save to buy a house that you can truly afford. As we enter this new year, putting a system in place to begin saving money is a resolution that can have an array of benefits. Building up your savings account can help you work towards achieving financial freedom, increase your rainy-day or emergency fund, or offer you a stepping stone to begin investing in your future with real estate.
Fortunately, purchasing a house is still a goal within reason. With a few tips, self-discipline, and some financial mindfulness, taking control of your expenses and building your savings doesn’t have to be as daunting of a task as you may think. Here is how you can get started on saving for your dream home in 2022.
Creating a budget encourages transparency, awareness, and accountability when it comes to spending. Planning where your money goes ensures that you have enough money to cover your wants and needs. A good budget will not only keep you out of debt, but will also allow you to grow your savings at the same time. When it comes to budgeting, a general rule of thumb is the 50-30-20 rule where 50% of your income covers your needs, 30% covers your wants, and 20% is placed into savings or to paying off debts. Follow this formula and watch your savings grow this year.
When it comes to saving money, it is important to pay yourself first. Commit to putting away a certain amount each month for savings. Even if the amount is small, it adds up over time and puts you closer towards reaching your financial goals. To simplify the process, set up automated savings deposits so that a dedicated portion of your paycheck will automatically transfer to your savings. This way, you won’t miss the money as much, as it never makes it to your hands.
With inflation rates jumping to highs that we haven't seen in 18 years, it's important to spend your money wisely to ensure you get as much as you can for every dollar you spend. Be sure to check for sales, shop at stores that offer price matching, use coupons when applicable, and collect rewards points where you can. Shopping is a necessary part of life, but there are ways to reduce the amount you have to spend on what you need.
Are you paying for a gym membership that you never use? What about multiple streaming services when you only watch one? You may even be overpaying for services like television, internet, home phone, and cell phone without even realizing it. Make a list of all of your expenses and eliminate the ones you don't use.
For services that you intend to keep, do your research and see if there are options to reduce your monthly charges. Oftentimes telecommunications companies offer specials, sales, or deals to longtime customers, or can work to modify your services and ensure you are only paying for what you use. These are great ways to lower the overall spending amount in your monthly budget, and leave more room to beef up your savings.
While having a credit card is an excellent way to build up a good credit score, it's important to pay it off on time, at a minimum. The longer you take to pay off your credit card debt, the more you have to pay in interest. You may also be charged compounding interest if your outstanding balance carries over month to month. Aside from paying more money in interest, having credit card debt can work against you when applying for a mortgage. Ensure you pay off all of your credit cards in a timely manner to maintain an optimal credit score, and leave you with more money to save each month.
Saving money doesn’t have to be difficult. With the right mindset and by following these tips, you are sure to watch your savings grow faster than you expected and before you know it, you can be moving into the dream home you have always dreamed of.