Saving for a big project like a house requires discipline and focus. You do not need specialised education to manoeuvre. How strategic and steady you are will determine how soon you can get your house. You might need money as a priority, but getting the right plan and financial insight can go a long way in making your dream come true.
How to Save for a House Down Payment
Plan for the House
Before you decide on the amount to save or raise, make a rough budget of the total you need for the house. After you have the total sum, you can either divide it based on the maturity time or the amount you can raise monthly. The answer will give you the amount you need per instalment and how long it will take to get the down payment. Budgeting creates a structure and direction for the project, from which execution seamlessly follows.
Minimise Unnecessary Expenditures
You often spend money exorbitantly on things you do not need or can be scaled down. If there is anything you can do away with for the savings plan's duration, do away with it. They include holidays, expensive clothes and jewellery, driving to work every day and many more. The amount realised from this scale down should be saved towards the house. Self-denial for a limited period is crucial for a greater good.
Halt or Redirect Long Term Benefits into Paying for the Down Payment
Most of the significant long term saving plans have a direct relationship to housing. A good example is the retirement plan. You can use the amount saved for retirement as the down payment for the new house. Henceforth, redirect any benefits accrued over the period into the project. After completing the house, you can now go back to the retirement plans. However, do not touch basic plans such as Health Insurance.
Find Another Source of Income
Apart from your main job, find another income-generating activity to boost your income. It should not compete for your attention on resources but complement your income. If you need money to start the hustle, be sure of its cash flow and market demand before committing. Use your free time after working hours and weekends to advance your hustle. If possible, let it be an activity or service you like doing or you are good at.
Look for a Credible Savings Institution
A credible financial institution is a key to the success of the project. Consider tier 1 or 2 commercial banks as your first point of call. They are liquid and can wade through any financial or economic crisis. Other elements to look for in a bank include:-
- Interest Rate per Year - this is the amount your money will generate after a certain period. The higher the rate, the better the offer.
- Core Business - the main focus of the bank can also help in deciding the choice of institution. Banks that deal with mortgages or housing finance have a better offer.
- Customer Service - look for a bank with an excellent account management portfolio that advises their clients to invest in long-term projects.
- Large Client Base - the strength of any financial institution is in the customers it serves. It also influences the branch networks.
Dispose of Unnecessary Assets
If you have assets that you do not use, consider selling them. Any asset that incurs maintenance costs but has a lower utility rate should be sold. It not only cuts down your recurrent expenditures but also brings in money to the course. Some of them include unused cars and electronics. Ensure that, at the end of the exercise, you only have the equipment and items. Consider selling them on e-commerce platforms where you can get a reasonable price.