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5 Effective Ways to Budget for a New Home

Posted on June 13, 2016 by Michelle Lefurgey

budget-for-a-new-home-couple.pngMany young couples choose to live with family or rent an apartment, but quickly feel smothered and are tired of wasting their money on rental costs. If you are finding yourself in this same situation, we have great news!

Buying a new home may be a more viable option than you realize. Since buying new is a slightly different process than buying an already existing property it can be to your financial advantage in many ways. But you do need to plan a budget for a new home, it doesn't just happen.

Why a New Home Build Makes Sense

Firstly, if you are deciding to build, there will be a "build time" for construction. This time allows step payments and a longer period of time to save up while already knowing where and what you will purchase. A traditional purchase would be a much shorter time period so you would need cash on hand for a down payment.

Even if you are not building, but buying a new quick-possession home, home warranty alleviates any stress about maintenance or necessary repairs as everything is brand new and in pristine working order.

Probably most importantly, you will love living there. The upgrades and amenities make your new home luxurious and it's a place you can be proud of calling your home.

But first, you need some concrete ways to budget and save to make your brand new home a reality. Here are a few tips on how to come up with the cash. 

Consider Downsizing

Similar to cutting back (which we'll cover below), downsizing on bigger pieces of your budget can make a huge difference in budgeting for a new home purchase. If you can downsize to a smaller rental space while you're saving, you will not only increase your house savings, but you'll be wasting less money on a rental in the meantime.

Relying on public transportation or going down to one car from two can also make a considerable difference in your monthly budget. Canceling services like cable or a gym membership temporarily can free up some funds as well. Remember to earmark that money and put it directly into savings though, or it will be easy to spend elsewhere!

budget-for-a-new-home-notebook.pngCut Back on Expenses

It's no one's favourite to cut out little things that we have come to see as "necessary," and instead see them for what they really are: small luxuries. It's the daily (or even weekly) latte, regular manicures and pedicures, spontaneous shopping trips, going to restaurants or ordering takeout. All of these are luxuries you don't need.

When you are trying to budget and save for a sizeable down payment on a home, these little things add up. It's especially helpful if you can set up a savings account that is tied to your chequing account so you can transfer money that you would have spent on a small luxury into your savings account. In a couple months' time, you will see cash adding up.

Save on the Essentials

You can't cut out everything, but you can still find lots of ways to save money on the things that you do have to buy. Shopping at a cheaper grocery store, going to farmer's markets for more affordable (and local) produce, and using services that offer discounts on essentials when you subscribe are all great options.

There are also countless smart phone apps you can use to save money at all the stores you already shop at. Think about the top three or four stores you go to regularly and download their discount app. Check it regularly to find ways to save.

Auto-Save

Setting up automatic savings either through direct deposit or to transfer automatically from your chequing to savings account is also very effective. In this scenario, you won't even see the money appear in your chequing account, therefore will never register to you as spendable cash. If you have a job that offers bonuses or commission cheques separately, set those up to go directly into your savings account as well.

Work on the Side

Getting a second job is an option and it's only temporary. Any additional part-time income will also be directly tied to your savings account, so it will be consistently increasing and not going to existing bills. Picking up a serving or bartending job, tutoring after school hours, or doing some freelance work are all quick and fairly easy options to make some extra money on the side.

Consider Your Financing in Advance

Alongside the process of saving money, you also want to make a decision about how you want to finance your mortgage. Builders have preferred mortgage specialists who will help you find the best mortgage for your needs and at the best rate available. Having this information ready now will make it that much easier to get approved when you have saved for your new home and are ready to buy.

These budgeting ideas and financing considerations are things you can start doing today. Creating a plan for designing, building, and owning your brand new home can start as soon as you want it to!

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Topics: mortgage & financial, new home build