Owning a home is one of the biggest purchases many people will make in their lifetime. And with the cost of a mortgage, closing costs and ongoing maintenance, it can be costly.
But, there are ways to save money and budget well when owning a home. From cutting back on discretionary spending to picking up a side job, these tips can help. Investing in a home warranty is a good idea to set up a budget. If you are wondering, “Home warranty, what is covered?” You are not alone. Many homeowners do not know what a home warranty is and the best way to know which to get is to research the best companies. Planning ahead and having a home budget will always save you money.
Set a budget
A solid budget gives you insight into your spending habits. A budget can help you determine the maximum home purchase price you can afford, as well as other homeownership costs like property taxes and homeowners insurance.
While buying a home is an exciting venture, it comes with a lot of expenses that can add up quickly. Creating a savings plan is one way to ensure you have enough money saved up for your down payment. This could mean cutting back on some short-term luxuries, such as skipping the iced coffee or monthly back massage.
Another strategy is to reduce other expenses, such as car payments or credit card debt, to free up money to pay for a down payment and ongoing housing expenses. Finally, consider establishing an escrow account for property taxes and homeowner’s insurance so that you can save the amount you need each month. These funds will accumulate over time and can be used when needed for these expenses.
Cut back on unnecessary spending
The most important first step is to know where your money is going. That means getting into the habit of tracking every single penny that comes in and goes out, even if it’s just in your bank account or on a credit card.
Then, you can identify any areas where you could cut back on unnecessary spending. For example, if you’re someone who frequently stops by your fave coffee shop on the way to work, you might be able to save a lot of money in the long run by simply brewing your own at home and packing a lunch for the day.
The same goes for other recurring expenses, such as subscription services or fitness memberships you don’t really use. Cutting these out and redirecting those funds to a savings bucket is another easy and effective way to cut back on your expenses as a new homeowner. This may not be the most fun part of budgeting, but it’s one that protects your investment in your home and your personal finances.
Set aside money for a down payment
When you’re saving for a big goal like a home down payment, it helps to sock away any financial windfalls. These could be money from side gigs, bonuses from work or even tax refunds. Stuffing these funds into your savings account or automated
deposit can help you reach your down payment goals much faster.
Eliminating unnecessary spending can also help you save more toward a down payment. For example, you may be able to cut out subscription services, entertainment or delivery services to save hundreds of dollars each month. You can also reduce or eliminate any debt that has high interest rates to free up cash to save.
Another way to save more quickly is by asking family and friends for money instead of physical gifts at holidays and special events. Just be sure to read the rules for your mortgage loan type regarding gift money. This can help you avoid any surprises down the road.
Make energy-saving habits
The little changes you can make in your day-to-day routines settle credit card debt add up to a big impact on your energy costs. This is a great way to save money while helping the environment.
For example, replace incandescent light bulbs with LED bulbs, which use 75% less energy and last 25 times longer than traditional incandescent bulbs. Also, install dimmer switches in rooms that you don’t use often to control your lighting more effectively.
Invest in appliances that are certified by the Department of Energy, such as refrigerators, washing machines, and home heaters. They typically use 25% to 33% less energy than non-certified models, which can significantly cut your electricity bills over time.
Keep an eye out for deals on energy-efficient items at your local hardware or home goods store. They often drop the price of products that are still in good condition to clear space for newer inventory. Also, look for sales on smart thermostats and devices that help you conserve energy, such as a “watts-up” or “kill-a-watt” meter.