It may seem hard to save enough money to purchase a home. But if you have a strong savings plan, anyone may accumulate enough cash for a down payment on the home of their dreams.
Tips to save money to buy your dream house
1. Build a better budget
Setting a budget is a very crucial step in the saving process. It is tough to redirect money to your down payment if you don’t know where your money goes each month.
You need to be very careful in calculating your monthly income, taking into account any income from a spouse or partner who will also be helping with the down payment.
- Next, gather all of your payments and credit card statements in one place. Take a look at your spending patterns. Keep track of how much you spend on basics like utilities, rent, and student loan repayment.
- Next, think about how much money you spend on non-essentials like entertainment, dining out, etc. each month. If you want to avoid doing this manually, a budgeting tool can help you automate the process.
- Getting the assistance of a financial counselor might give you a better concept of what your budget should look like if it all still seems too daunting.
- Once you’ve broken down your spending into categories, search for places you may make savings. For each category, establish a firm (but reasonable) budget and adhere to it. Make sure to set aside a particular amount of money each month in your budget for your down payment. Think of your savings as a necessary cost.
2. Stick to the 50-30-20 rule
Following a 50-30-20 budget, where 50% of your take-home income is set aside for fixed bills, 30% for any discretionary needs, and 20% for savings, is one way to make significant savings.
Although it won’t be simple, giving up conveniences you may otherwise be able to afford will be well worth the effort after you move into your new home.
3. Search for other employment options
Even if it isn’t always practical, changing professions and earning a larger salary might help you save money for a down payment.
To find out if you make as much money as those who hold positions comparable to yours, look through websites that list job openings and wage comparisons.
Consider using your results as leverage to negotiate a raise or ask about a promotion at work if you find out your income is below the industry average. Consider looking for higher-paying jobs you are qualified for if you don’t enjoy your job or can’t obtain a raise.
4. Consider making lifestyle adjustments
You should think about major lifestyle adjustments if you are committed to buying your own house. Moving temporarily to a smaller apartment is one option that might help you save a significant amount on your monthly rent.
In addition to your regular job, you could think about alternative income options. You may save for that down payment on your house by doing both, living within your means for at least two to three years, and reducing spending like vacations, entertainment, and other expensive memberships.
5. Invest in profit-earning instruments
You must invest in various types of money growth instruments to accumulate a corpus of at least INR 50 lakh over the next ten years. Doing so will allow you to earn a respectable rate of appreciation throughout that time.
Consider investing in mutual funds, fixed deposits, public provident funds, or all three (PPF).
Mutual funds can help you earn returns of between 9 and 15 percent annually, depending on the coverage you choose. PPF, on the other hand, gives an interest rate that is around 7.1% yearly compounded.
The ability to start an account with as little as INR 100 is the nicest aspect of investing in a PPF.
Unlike mutual funds, investing in PPF carries no risk at all. You may contact our professionals at EduFund, and they will assist you with the proper course of action for investing.
Download the EduFund app and create an account to start investing. With zero charges and no hassle account opening process is from the comfort of your home.
6. Try a systematic investment plan (SIP)
A Systematic Investment Plan (SIP) enables a recurring investment of a defined sum into a mutual fund program.
With a minimum commitment of INR 500, you may participate in a mutual fund plan via SIP and take advantage of rupee-cost averaging and compounding.
When you consistently invest, regardless of the state of the market, you usually end up with more units during times of low demand and fewer during times of strong demand. This substantially lowers your entire investment cost.
The down payment amount might range from thousands to even lakhs in rupees, depending on the home you pick. It’s wise to conduct some study and select the option that best satisfies your emotional requirements and preferences as well as your financial circumstances.
