Buying a home is often the largest purchase one will make in a lifetime. And saving $100K on your next home sounds crazy, right? While saving up for a whopping six-figure milestone down payment may be a challenge for some, it is not actually impossible.
How to save $100k to buy your new home
1. Learn To Be Like the “Millionaire Next Door”
If you want to save $100,000, you’re going to have to adjust your mindset first. According to the book The Millionaire Next Door by Thomas J. Stanley, millionaires are quietly setting up a life of wealth instead of being distracted by things that make them look wealthy in the eyes of friends and associates.
Changing your beliefs around money will help you have the discipline of following-through with your goal.
2. Live Below Your Means
You’ll need to take a deep dive into your current lifestyle and see which are an absolute necessity and which ones are nice-to-haves. Then, you can make a realistic budget and know your limit when it comes to expenses.
You can also consider doing things to keep your costs down such as:
- Cooking your own food at home.
- Move to a smaller home to save.
- Recycle and reuse items as much as possible before buying new.
- Give up smoking, drinking, or other costly habits.
- Walk short distances when possible rather than taking the car.
3. Clean Up Your Credit
Not everybody’s going to have to do this step. But that’s why you have to talk to the lender first because sometimes if you have a higher credit score, then you can qualify for more or get better interest rate—which ultimately results in a lower mortgage payment. It’s a good idea to take some time—if you need to—to clean up your credit and raise your score. It could be a short period of time, but it will give you the possibility of buying more.
4. Don’t Just Save, Invest
This is another key component of your personal budget. Put your money to work for you while you sleep on investment vehicles like stocks, bonds or IRA. But make sure to equip yourself with knowledge first. Don’t invest in something you don’t understand.
5. Take Advantage of Employee Benefits
For starters, you can invest in your company’s 401(k) plan. Also, take advantage of the benefits your employer may provide, such as special discounts at stores. Also, use health savings accounts, if available, to save a little on health care expenses. If your employer provides assistance for skill upgrading programs, take advantage of those opportunities as well.
6. Generate Additional Income
At the end of the day, you can only cut back so much. Start a side hustle or improve your career worth. Learn something new or let your skills help you rake some extra cash. You can also consider selling some of the stuff you don’t use. This is not much of a contribution, but it adds up.
Saving your first $100,000 can be quite simple if you’re willing to make some adjustments early. If you have any questions about real estate or would like some guidance on getting pre-qualified and finding the right lender, feel free to contact our team at Broadpoint Properties.