Do you want to own your own home? Who doesn't, after all? You may not be looking to buy a home right now, but you will be in the future. Most people desire to own a home, but only a select few are able to obtain the home of their dreams. If you are concerned about saving enough money for a down payment, you are not alone. Hopefully, our money-saving tips will help you save up for the down payment on the apartment you've been eyeing.
Your bank will finance nearly 80% (in some cases 90%) of the cost of the house/flat. The remainder is a down payment that you will have to finance yourself. This is a significant sum for a middle-class family. For example, if your two-bedroom kitchen costs Rs. 30 lakhs, your bank will finance up to 24 lakhs, with the remaining 6 lakhs being self-financed.
Buying a home is a complicated decision, especially if you are a first-time buyer. You will require professional assistance to find the best homes at the best prices. Having enough money in the bank before going house hunting will give you confidence and peace of mind when making your decision. We'll share some money-saving tips here to help you take control of your finances and save for that intimidating-looking down payment.
1. Keep track of your spending and expenses.
OK, we admit this is one of the most boring and clichéd money-saving tips, but it really works. There are numerous apps and websites that can assist you in tracking your spending and keeping a running total of the amounts spent on specific items or categories.
Many people are surprised by this process. We don't always notice the obvious until an app tells us!! You will need to cut back on luxuries and redirect funds to savings. Discovering where your money goes is the first step toward determining how to keep more of it in the bank.
2. Invest in Mutual Funds- Do not be afraid to do your research.
Simple research on the power of compounding or the power of compound interest will reveal why mutual funds are one of the most popular investment vehicles today. In recent times, India has seen a sudden increase in the number of people investing in mutual funds. While there are many factors to consider before investing in mutual funds, we recommend starting a monthly SIP in an equity fund that matches your risk tolerance.
In general, equity funds are the best because they provide high rates of return. These funds are also risky because market fluctuations in these equity funds are a regular occurrence; however, over time, Mutual Funds typically offer higher returns than bank FD rates.
Visit the website valueresearchonline.com to learn more about Mutual Funds. The final decision is yours, but we can speak from personal experience and say that mutual funds provide good returns on investment. There are numerous SIP calculators available to help you plan the exact amount of savings you need each month to reach your down payment in a specific time frame. A mutual fund SIP calculator, for example, will tell you how much money you need to start saving for your 20% down payment if you plan to buy a house in 2020.
This method of investing is not one of the typical money-saving tips, but it does help your money grow.
3. Create and stick to a monthly budget.
Sticking to a monthly budget will be difficult, especially if you are accustomed to a life of luxury and indulgence. Sticking to a strict budget is often unpleasant and difficult. Always remember that a penny saved is a penny earned. Allow yourself an occasional treat or two, but treat them as an exception, and ALWAYS compensate for the cost of this exception in other activities. Some budgeting now is a minor sacrifice that will be quickly forgotten when you get the keys to your new home.
4. Begin saving early.
Have you ever heard the expression ""well begun is half done""? One of our education system's major flaws is that we are not taught financial literacy at a young age. We are not taught how or why to save. We have no idea about long-term and short-term financial goals.
Despite our mothers' constant encouragement to save, the majority of us lack proper financial literacy. Begin saving early, allocating at least 15 to 20% of your monthly salary savings. Begin with a job with limited responsibilities. Some people save up to 50% of their savings while they still can. This is the most effective money-saving tip among many.
The benefits of starting to save early include having enough money for a down payment on a house by the age of 30.
5. Look for ways to increase your earnings.
Most of us middle-class salaried people have only one source of income (i.e. monthly salary). At most, both husband and wife work, so there are two sources of income in such cases. The number of channels through which money leaves is always greater than the number of channels through which money enters. Consider your income and expenses in the form of an upside-down funnel. Every successful person understands that in order to save money, additional sources of revenue must be created.
There are numerous ways to generate an additional source of income. Consider starting a blog, a YouTube channel, or simply doing affiliate marketing. If you do your homework, you can start an online store and make a lot of money. There are numerous videos available online that can help you learn about online businesses.
You don't need a large investment to begin any of these activities. You only need a laptop and some time. A TedX video on YouTube claims that it only takes 20 hours to learn a skill to a satisfactory level.
Your budget is divided into two sections: money coming in and money going out. You'll get the best results if you work on both sides.
Create an untouchable savings account for the purpose of down payment. Except in an emergency, don't even think about spending any of that money until you're ready to buy a house. Setting up a separate account dedicated solely to this purpose makes it easier to keep an off-limits down payment fund.
Consider this bank account to be a black hole into which no light can escape.
Here's a video with some more money-saving tips.
We hope you found these tips for saving money for a down payment on a house useful. Saving for a down payment on a house is difficult but not impossible. There are other things you can do to benefit financially. For Example, Pradhan Mantri Awas Yojana is a great scheme that has benefited millions.
Listen to the Podcast as well."""