How a Financial Plan Can Help You Buy Your First Property

Saving money for your first property is often one of the most important personal finance processes a person will undertake. Whether you’re just getting into the planning process or are further into your property purchasing journey, taking a well-planned approach to buying a first home is crucial. It can minimize the financial impact of your mortgage, and maximize your chances of securing your dream home.

According to HotPads, the average American renter will spend 6.5 years saving for a 20% mortgage down payment, in the process saving approximately 20% of their income. With this in mind, a plan that minimizes the time you spend saving will mean that you’re in a better financial position for the long-term.

Even if you’re in a strong savings position, already have a number of planned ways to save, or are just starting to build up your positive personal finance habits, it’s important to plan things out. It can ensure you have a smooth home buying process that leaves you in the best financial position possible.

Here’s how a financial plan can help you buy your first property.

Breaking the Process Down into Steps

When you’re trying to develop the best plan to save money for your first home, mapping out comprehensive steps might help. With the right approach, you’ll be able to minimize the time you spend saving, and will barely notice the changes you make along the way.

1. Make a Budget

While developing a budget is an obvious first step in managing money within any capacity, it plays a big role in developing a broader financial plan that is achievable and effective. Ideally, you’ll want to create a budget that is realistic, productive in working towards savings goals, and one that accurately considers both your income and expenses.

In your budget, you can determine everything from exactly how long the savings process will take, to how much you can spend on lunch every week. When it comes to your savings goal with respect to saving for a mortgage down payment, the ideal figure will be based on 20% of the purchase price of the house, in addition to further costs associated with the overall process.

2. Diversify Your Revenue Streams

Another important part of your first home savings plan should be to diversify (or just grow) your income streams.

When it comes to determining the right approach to take, you’ll need to consider a number of factors–whether you have the capacity to take on more work, the flexibility you require, and more. There are plenty of ways to pick up a side hustle. But often, your approach might focus more on how you can develop your financial position within your current job.

Ultimately, side hustles are used by a significant percentage of Americans–approximately 34%. Developing a steady stream of additional income will allow you to dedicate all of your additional funds to any initial first home payments, and the right approach will mean that you’re laying the groundwork for an ongoing income that contributes to future mortgage payments or maintenance costs as well.

3. Decide Where to Keep Your Savings

Once you have a solid income approach, the next part of your financial plan should involve determining where you should be putting your money. The most effective options will offer security, growth, and accessibility, depending on your needs.

Firstly, consider your options in regard to sa v ings accounts. There are many options available, but when saving for a first home, your choices will likely be narrowed down. You could put your money into a standard savings account, but using something like a high interest savings account would ensure that you see higher growth.

Ultimately, the most ideal place to put your first home savings might be within a term deposit account. A term deposit is a great way to tie your money up until you need it, while ensuring you can take advantage of an ideal interest rate.

If you’re willing to take on more risk, then your options are even more comprehensive. Your potential approaches might include investing in stocks, cryptocurrency, or elsewhere. With this being said, manage risk appropriately, and understand the importance of diversifying your investments.

On a final note, a great approach to developing a financial plan is to automate your saving and money management processes. Automating transfers into your savings accounts will mean that you can stick to your savings goals, and will save you the hassle of doing it yourself.

Buying a first home is never easy, but with the right financial plan and a dedicated mindset, you’ll be moving into your own home in no time.

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