There are many specific challenges that people will face when saving for their home at different ages.
Saving for your first home is a task that will require strategy and discipline. It doesn’t necessarily get easier with age, but those in their 30’s and 40’s may be better prepared than younger people looking to make such a large purchase.
Saving for your first home is never an easy prospect. The purchase of a house is a huge investment, and it will require you to give up certain luxuries, in order to accomplish your long term goals. However, the actual burden and process will be very different depending on your age. In your 20’s things are new but daunting, in your 30’s you are seasoned but still may not established, and in your 40’s you will be looking towards the future and taking everything in with a wide breadth of perspective.
The thing that is always going to be true when saving for a new home is, no matter what age you are, you have to undertake this task with an eye towards the future. A home is a financial investment that will require a significant amount of your income, as well as ongoing expenses over years and decades. At the same time it will also be a part of your life, and the place that you spend your time and raise your family. That makes a sound financial strategy vital to achieving your goal of home ownership.
Saving For Your First Home In Your 20’s
When you are in your 20’s you are generally just starting out. You might be working at your first job, or even still in school, or doing an unpaid internship for a company. Often you will not be making that much money, and the goal of home ownership will seem far off. However, this is exactly when you should start saving your money for a house, By starting early you will be able to live your life according to a sound and reasonable financial plan which will make your long term goals much easier to achieve.
In some cases, depending on where you live and how the housing market is doing, it may be possible to actually save money by purchasing a condo, or home instead of paying rent each month. This comes with the added bonus of actually having an investment that will be worth something in the long term. The drawback to this is that you may be stuck with a property that you are unable to get rid of when you feel that it is time for you to move on.
When Suze Orman was asked by Today.com about money saving tips for people in their twenties she remarked “Buy a home you can call your own. There will never be a better tax write-off than a home.”
The important thing in your 20’s is to think of your long-term goals. If you want to own a home then you should start saving for it immediately, as interest will build up on your accounts over time. It will also make the process easier if you can set aside just a small amount of money periodically, rather than trying to quickly cut your budget to purchase a home over the course of just a few years.
If you are trying to save money for a home purchase in your 20’s then another important thing is to avoid debt as much as possible. There will be numerous opportunities to sign up for high interest credit cards, which can haunt you with bills for decades into the future. Car loans and expensive vacations are also enticing purchases that should be avoided if you have future dreams of owning a house. Instead try to maintain responsible habits and save as much of your money as possible.
Another strategy is to put some money away in high interest savings accounts. Things such as CD’s, bonds, and money market funds may have higher rates of return if you are willing to leave your money with them for several years or even decades. In that way you can plan for your 30’s and 40’s far before you ever reach them.
Saving For Your First Home In Your 30’s
Most people are going to be a little more established once they reach their 30’s and will have a better job and more income to both save and spend. That can make it easier to purchase a home, but a sound financial savings strategy still needs to be employed in order to be effective. It may be possible to take more out of your paycheck each week for this endeavor, but at the same time you will also often have more obligations that need to be met.
Many people in their 30’s will be married, so the process of buying your first home will be a joint venture. If children are involved then that is an even more complicated situation. With a spouse, it is important to be sure that you are on the same page as far as your goals, and how much you want to set aside each month. As a unit you need to work together, cutting back where possible, without detracting from the quality of your lives. You also need to ensure that you have savings set aside to help with emergencies that can arise unexpectedly.
Saving For Your First Home In Your 40’s
By the time you are in your 40’s most people will have a career, a steady job, and a life path that they are following. This is not universal, but as you age you gain experience in whatever field you are employed in, making your services more valuable. That allows most people to leverage their background in order to command a better paycheck. Which in turn can make it easier for you to set aside money in order to purchase a new home.
At this age you’ll often be looking to the future, and retirement costs, which can cause you to feel financially squeezed on both sides. However you shouldn’t worry. The money that you set aside to purchase a house is actually an investment that will act as an asset when it comes time for you to retire. That makes it a sound part of long term financial planning.