Buying your first property is an exciting prospect.
But, before you can get there you need to establish the financial foundations that make it possible to achieve your big purchase. As a result, it’s necessary to create a savings plan that’ll bring you closer to your home ownership goals.
The benefits of creating a savings plan
When you want to buy a house, taking a haphazard approach means you’re unlikely to reach your goal in a time-sensitive manner. When you sit down and calculate how much you need to save and when you can realistically reach your goal, you create an actionable and realistic plan.
Having a target means you’ll become a homeowner faster, you can create a lifestyle budget that’s conducive to your plans, and you demonstrate financial responsibility to your future mortgage provider.
Steps you need to take to create a savings plan
- Look at your monthly income and outgoing expenses, then form a realistic idea of how much you can deposit into a savings account.
- Figure out how long it will take for you to reach your goal. While doing so, factor in one-off expenses such as holidays and birthdays.
- Identify the type of savings account that can meet your needs. Are you aiming for the highest interest rates? Or, maybe you would prefer one that doesn’t let you access the funds until you reach your goal? Some people enjoy the convenience of using one that connects directly to their online banking.
- When your earnings come in, pay into your savings account before spending money elsewhere.
- Set up motivational tools to ensure you stick to your target. For example, you could stick a calendar on your wall that shows how much you’re saving each day or the percentage of your savings you’re currently achieving.
Planning your savings means there are fewer opportunities to skip making deposits because you would rather have more money to spend. When determining how much you can put away, stay as realistic as possible to avoid feeling a squeeze that distracts you from your goal.
Reaching your target takes time, but it’s worth it
Depending on the cost of your prospective property, reaching your target may take a number of years. However, when you have a solid plan in place, you’re putting yourself on a realistic path towards becoming a homeowner.
Having savings also delivers financial assurance, plus it gives you an idea of what it’s like to make a solid financial commitment. As a result, when the time to pay your mortgage comes around, you’ll find it easier to make your monthly payments.
Disclaimer: The information in this article is intended as guidance only. Please seek expert advice before making any major financial decision.