Making that first real estate purchase may seem like a far off dream, especially if you are a young, newlywed couple or a recent graduate. However, it is possible for most people. Unless you are blessed with a large amount of ready cash, the process begins with saving.
You will need to gather the money for a down payment, loan processing fees and hiring your own house inspector. Smart budgeting can make it possible for you can come up with enough money to accomplish all this. Here are a few keys to success in making it work.
1. Determine your baseline.
You cannot understand how to manage your budget until you know what you are currently doing. Start by charting your current year’s spending. Go through your records and sort out what you spent on housing, groceries, utilities, clothing, work-related expenses, insurance, recreation and any other categories where you spend your money. Make your chart clear and understandable so you can refer to it later.
2. Identify the easiest areas where you can cut the fat from your current spending.
Possible examples might be groceries, recreation and clothing expenditures. Put these at the top of your list of costs to cut.
3. Plan specific ways to cut the most easily lowered costs.
Think about how you can lower each of the most flexible bills you have identified. Can you clip coupons or shop the sales to cut down on grocery costs? Can you buy less expensive clothing or make more classic and versatile clothing purchases that will not go out of style quickly? Can you eat out less often, or take fewer or less extravagant vacations? Make your plans realistic so you can stick to them.
4. Research ways you can possibly lower the less flexible expenses.
Shop around for less expensive insurance that will give you equivalent coverage. Look at ways to cut work-related expenses like transportation. Medical expenses are also difficult to manage at times, so if you can live a healthy lifestyle you may be money ahead.
5. Take on your utility bills.
Consider how you might lower your utility bills. Many communities offer a service where they evaluate your home for energy efficiency and give you tips on how to lower your bills. Take them up on the service. Turn down the furnace, turn up the AC and stop all your water leaks. Your utility bills will likely go down considerably.
When you have evaluated your situation fully, put your plan into place. If there is any waste in your budget at all, you can root it out. With a newer, leaner money plan, you can save the money for your first home quickly, easily and fairly painlessly.