How to Save for Your Dream House: 5 Ways to Keep Your Money Saving Goals

A house is perhaps one of the largest and most important purchases we make in our lives. Like many young professionals out there, you may be thinking about how you can save more to finally buy a house you can call your own. And while setting the intention is a great first step, the most important part is actually following through with your saving goals.

Here are some easy ways to keep you on a money-saving spree.

1. Set a SMARTER Goal.

We often hear about setting SMART goals, right? Specific, Measurable, Achievable, Relevant, and Time-Bound. Time to make it smarter by adding the two extra letters, ER: Evaluated and Revised.

If you’re saving for a specific goal like buying a house, you’re a lot more likely to modify your spending patterns and follow through with the savings plan. You’re more likely to stick to a strategy if you are anchored to a clear vision of what you want. Map out your plan of action, starting with your SMARTER goal.

READ: How to Set SMARTER Financial Goals

S- Specific What do you really want? Know the details of what you want in a house. Think about a specific location you want to settle in. Do you need to be close to your place of work? Do you need grocery stores and parks within walking distance? Do you want some outdoor space for your furbabies? How many bedrooms?

M- Measurable. Know your financial capability. One of the most powerful tools for success is measurement. As they say, you can’t improve what you can’t measure. Start by tracking your income and expenses, existing debts, and savings for a downpayment. Check out current prices for your dream home, and study the interest and amortization should you take the home loan route. From there, you can set measurement milestones.

A- Achievable. What can you afford and by when? Think through all the details you have gathered. Does it really make sense to purchase a home? If not, you might need to consider pushing your timeline a little further or maybe look into other options.

R- Relevant. Where does “buying a house” fit in your life goals? What are your short-term plans and long-term vision? Are you building a home for starting or expanding your family? Will you be living in the new house or would it be a rental property?

T- Time-Based. When can you start the buying process? It might be helpful to set deadlines for each step of your home-buying journey. Set a deadline for each milestone. Instead of just stating, “I will buy a house this year,” it will be much better if you get a little more specific.

E – Evaluated. Take time to evaluate your goals. Regularly assess your goals as you go through your savings journey. Are you hitting your milestones?

R – Revised. The final aspect in using the SMARTER techniqueis to re-adjust your approach as needed. If, for example, you’re chasing a goal but keep hitting a brick wall, try changing your method. Readjusting or revising your goals doesn’t mean that you have to throw your plan and begin again. It means that you must experiment with different ways until you find yourself coming closer to achieving your goals. That is why it is critical to evaluate yourself regularly, whether it’s weekly, monthly, quarterly, or annually.

2. Track Your Spending and Set a Budget

You must first determine where your money is going before figuring how much you can save, regardless of how large your target savings for your housing fund is. Analyze your previous month’s expenses and categorize essentials and non-ssentials. Shopping, movies, restaurant trips, and possibly spa vacations are non-essentials (wants) with some wiggle room, while essentials (needs) are generally set expenses (house rent, car payments, food, etc.)

Be honest and figure out what you could do without and make a firm commitment to putting that money aside. Can you, for example, cook at home instead of going out to eat twice a week? Alternatively, you might unsubscribe to Spotify or downgrade your mobile plan.

READ: #PlannerNerd: FREE Printable Financial Planner

3. Become Debt-Free

By that, I mean free from high-interest debt. There is no one-size-fits-all solution to tackle debt such as credit card bills. But if you have money set aside in an emergency fund already, pay down high-interest debt first before focusing on long-term savings goals. If you don’t have an emergency fund, though, you should at least start there (with at least 1 month of buffer fund) before tackling your high-interest debt.

4. Automate Your Savings

This is by far my favorite savings tip. This has helped me with reaching my savings goal. Schedule a monthly transfer from your payroll account to a savings account linked to it. This strategy eliminates the need to remember to make a deposit and reduces the chances of you wasting money before saving it.

5. Don’t Spend “Free Money”

When you have “extra money,” such as monetary gifts or maybe bonuses, it’s best to put it toward your dream home fund instead of spending it. After all, it wasn’t in the budget to begin with, so you won’t really miss it. This is true for raises and promotions as well. Instead of overspending, save the difference (but feel free to reward yourself with a small gift!)

Bonus Tip:

It’s not always easy to save money! Teaming up with a friend, family member, or coworker who is also attempting to save could help you keep on track. Having an accountability partner can help you in staying motivated and sticking to your budget. You’ll be able to share your milestones, vent about setbacks, and seek support when needed.