It’s never too early to start saving up for a house, especially now that you’re in your 20s and have just entered the workforce. And with the current economy, student loan crisis, and other things that make it harder to become a homeowner, there’s no better time to start thinking about home acquisition while you’re still young.
Unless you are a trust fund baby or already have a fat bank account in your 20s, saving up for a downpayment is nothing short of a challenge, especially for millennials and Gen Z’s. Thus, here are some of the best ways you can save money for a house while you’re still in your 20s:
Learn how mortgages work
Don’t know how home loans work? That’s perfectly okay. Most of your peers have little to no idea how real estate or mortgages work either. But if you’re serious about buying a house in your late 20s or early 30s, start learning about mortgages now. Specifically, learn how pre-qualification works, the credit score you have to have, and possible modes of financing you can consider.
Set your goals
What kind of house do you want? How many rooms do you need? Do you plan to have a family before or after buying a house? These are just some of the questions that you have to ask yourself when determining your goals for buying a house. In this way, you can align your current lifestyle and financial behaviors towards your end-goal of acquiring a home. For example, if you set your sights on a 2-bedroom starter home in the suburbs, you can better determine what you need to do to achieve that goal, as well as create a timeline for it.
Follow your budget religiously
Once you enter your first job, start practicing how to budget your finances responsibly. Set a monthly budget as well as the amount of money you want to put in your savings. Then, learn how to spend only what you have allotted for yourself, and not a penny over it. It might not be fun to hold back on shopping, partying, and traveling while in your 20s, but your future self will thank you for it.
Go easy on your credit card
A lot of 20-somethings make the mistake of abusing their credit cards and end up paying for it in their 30s. Not only does this hurt your credit score, but having too much debt will make it harder for you to save money for a house–let alone pre-qualify for a suitable mortgage.
Rent a smaller place
It’s more challenging to save up for a house while you’re paying a good chunk of your income for rent. As better alternatives, you can rent a smaller place, get roommates to split housing costs, or live with your parents while you’re saving up. Granted that these are quite some sacrifices on your end, but lowering your housing costs will divert more money to your house fund.
Buying a home is rarely easy, regardless of what age you are. However, one thing remains true: the earlier you start saving up for a house, the better chances you have at acquiring a good home loan.