Owning your first home is a big goal and it seems like it requires big steps to get there. Once you reach that goal though it is very satisfying and rewarding as it provides you some good security and a good long term investment. It is also something that can be left behind for your kids. However, most people face the problem of not being able to save up for the down payment. People struggle with this mostly because they aren’t budgeting correctly or they’re just not budgeting at all.
The way that most people budget is the decide on a figure that they need to save and then they say ‘okay. to save that amount of money I need to put aside $x every pay’. This sets up unrealistic expectations and almost sets you up for failure and disappointment. It makes it hard to stick to the budget because you haven’t planned for any unexpected expenses like birthday presents or getting your car serviced or your next power bill.
The best way to start up a budget would be to find out where you money is currently being spent. Look at statements and receipts for the past 3 or 4 months and break down your expenses into categories. Then start looking at future potential expenses like servicing your car or a quarterly gas bill.
Having all this laid out in front of you in a spreadsheet gives you a bigger picture of where you money is going. Start cutting out certain expenses you could do without and start cutting back on expenses you feel you could do with less frequently. Things like going to the movies can be reduced. Instead go to hire a DVD and watch a movie at home, or even with coffee, instead of buying a coffee before work every day starting making your coffee at work.
This will help you put a realistic budget together, the most important thing is that you always have a category in your budget for yourself. Reward yourself as you go, if you’ve been sticking to your budget rigorously reward yourself with a gift or a night out. This will help you feel like your accomplishing something rather than feeling like you’re punishing yourself all for a house.
With all of the money that you start saving you need to make it starting working for you in a high yield savings account. Some people prefer other forms of high yield investments, but make sure that you are earning some sort of return on your money to help you reach your goal sooner.