Home is one of the most important necessities of life. At an early age, children begin to draw their parents and the house they live in. As we grow older, many of us wait for the moments when our hard school or work hours are over to return home and take a break. It is the place where we have most of our cherished memories. Since each of us has our own unique personal taste, the dream home differs from one person to another. Even if you do not have many fortunes at a young age, you will want to save up to get the dream home that you and your family will live in for the rest of your life.
Owning a home is the biggest dream for any couple starting a family. It's the most important step toward parenthood. Furthermore, your home is one of the biggest assets you'll have as an adult. Often, owning a home becomes an unattainable dream for many simply because it's such a costly investment. A structured approach and basic financial planning can help you save enough to make this dream come true.
With a few simple steps, you can make your dream home a reality. Here are 7 simple steps you can take to effectively save money on your own home.
Controlling expenses and not making impulsive purchases are essential factors to consider to avoid financial problems in the future.
In a report in the Spanish magazine "Psicologia y Mente," writer Juan Armando Corbin said that if you'd like to have a savings reserve but haven't been able to do so, there are some tricks you can use to save money, as well as other tips.
Be careful where you keep your money
Some people may have dealt with a particular bank for many years and feel comfortable conducting their transactions with it. However, beware: many banks charge high commissions and interest for their services, which can often be exaggerated and detrimental to the customer's interests.
In this case, you should research and check other banks' policies to see if there are better options to save money.
Make saving money one of your goals.
The first step to saving money is to set a goal for yourself and make it a goal. Often, we set goals that we later fail to achieve, so we must first define our goals carefully.
Save a fixed amount every month
Once you decide that you want to save money, you need to move from theory to practice, that is, you should start saving immediately.
You can save money if you set aside a little money each month, even if it's a small amount, especially if you schedule your expenses on a weekly basis.
Do not use a credit card
The author points out that credit cards can be useful when it comes to making purchases, but they can create an unrealistic perception of the money we have and the amount we spend. Therefore, it's better to leave home with only the money you need rather than incurring exorbitant expenses with a credit card.
It is always a good idea to calculate what you spend monthly, and put what you will spend during the month in a special envelope.
Think about what you spend
The author advises buying only the necessary items that you need, such as buying shoes to wear them and not because you like them.
A good strategy to avoid buying unnecessary items is to wait to make a decision, that is, think carefully before purchasing any item. Analyze the pros and cons of your purchase, and do not fall for the beauty of product packaging.
Think long term
Some people may hesitate to save if they are thinking only in the short term, but it will be much easier if you think long term and want to avoid financial problems when you get older.
Have fun while saving
Saving isn't fun, but it's necessary. There are apps that can make saving fun—like SaveApp or SmartyPig—which make it a very exciting challenge.
Chewing gum and music
Since many places use music or scents to engage our senses, you can chew gum and put on headphones when you go shopping, which will help you consume less impulsively.
Think about how you earned this money.
Earning money is worth the effort and effort, so the next time you go shopping, think about the times of fatigue you went through, and the hours you spent to earn the money that you will spend overnight.
Benefit from psychology
Psychology is a science that provides knowledge about many issues that affect our day to day, which is why it is always good to learn more about these topics and read articles about the psychological tricks that stores use to make you spend. more money“. Surely you can draw some conclusions to save money.
Beware of electricity and water
With our rising electricity and water bills, it's always a good idea to turn off lights when not necessary and avoid wasting water. For example, you could place a reminder next to the faucet to discourage wasting water.
Preparing food at home
Going out to a restaurant may seem more convenient than cooking at home if you eat lunch at the office, but if you want to save money, it's better to bring your own food from home.
Using the 24-hour rule
It is a good idea to apply the 24-hour technique if we want to save money. This technique involves delaying the decision to buy anything for up to 24 hours.
Put a reminder on your card
If you don't want to give up your credit card, at least put a reminder next to it so you don't forget that you're saving. You can put a sticker on your wallet so you remember.
stop smoking
Smoking is one of the harmful and expensive habits that must be abandoned. If you stop smoking, you will not only notice the benefits to your health, but also to your pocket. Quitting smoking is one of the most effective ways to save money, but it also requires significant sacrifices.
Easy Ways to Save Money for a Home
1. Increase your credit score
One of the most important factors credit companies consider when disbursing a loan is the borrower's credit score (of course, in Islamic loan format). A good credit score reduces the lender's risk of granting a loan. It also creates the impression that the borrower will not default on loan repayments. An important aspect of maintaining your credit score is your credit utilization ratio, which is simply the ratio of your current available credit limit to your actual credit limit.
Another essential part is paying your credit card bills and other loan repayments on time. This will negatively impact your credit score. While you're applying for a home loan, you should ensure that you don't have any other loans, credit cards, etc. All of these basic tips can ensure you maintain a healthy credit score, which is essential for easy home loan approval.
2. Save 20% on the down payment price.
The down payment is the minimum total amount you pay for a home. The remaining amount of your home's price is converted into periodic payments toward your home loan.
It goes without saying that the more you save for your down payment, the lower the amount you have to borrow, and the easier it will be to pay it back in less time.
However, you should put down at least 10-20% of the home's price as a down payment. This is essential to avoid paying a large sum called "private mortgage insurance," or PMI, which is insurance against your loan to protect the lender against defaulting borrowers.
3. Invest in a home that needs repairs.
This may seem a bit counterintuitive. But it's always better to look for a home that may not be in very good condition and buy it. There are several advantages to doing so.
- First, you can purchase the home at a much lower price than any other home on the market. The cost of renovations and installations is not as high as that of purchasing a fully renovated home.
- Secondly, not many people will be looking for a home like this, so you may have a stronger bargaining power to get a better price. Who knows, you might even get a steal if you're a good negotiator.
- Third, custom fittings ensure you can personalize your home to your taste and style. This can make your living space resonate with your personality rather than conforming to interiors already built by someone else.
4. Limit online shopping
Online shopping on major e-commerce sites and apps represents a significant portion of impulse purchases made by millennials. Maintaining a monthly online shopping budget can be a significant help.
Furthermore, it can help if you analyze your past 20-30 orders on the e-commerce site you visit most often. Ask yourself how many of those XNUMX products you actually use. How many of them you actually need, and how many you can live without?
Once you analyze this, you can gain a better understanding of your online shopping expenses—which often consist of impulsive purchases. This simple exercise can help you save thousands that you can invest in your home improvement fund.
5. Try using cash when you go shopping.
It's mostly psychological, but it's seen as a result of multiple studies that people who pay for Credit card route They tend to spend more than people who use cash for their payments. Carrying physical currency and going the old-fashioned way of withdrawing money from an ATM can help you save money for your future home.
Making a simple lifestyle change to use cash most of the time instead of debit or credit cards can prevent frivolous spending and impulse purchases. This can help you save a lot of money over time.
6. Get in touch with a good real estate agent.
While it may seem counterintuitive in this digital age to hire a realtor, it is a good idea to make your home ownership journey smooth for you.
They can scout for the best properties for you, negotiate and close the best deals for you, and reduce the legal jargon and paperwork to a few signatures here and there. Trying to save on the realtor commission is a good thing to do if you don't want to search for a home yourself.
7. Reduce unnecessary grocery expenses.
Creating a list of necessities you need to buy at the grocery store and limiting your grocery shopping to only those items can help save you a lot of money.
Sometimes our grocery store carries so many items we could live without. Calculating these expenses on an annual basis can add up to a significant amount of money. This can be avoided, saving you a significant amount of money toward your dream home.
Buying a home is everyone's ultimate dream. However, since it can be quite expensive, you should plan ahead. It's never too late to save up to buy your dream home! Start saving and build your dream home – rupee by rupee.
