How Millennials Who Rent Can Save to Become Homeowners In 2021
As house prices continue to soar, saving enough money to buy a home can be daunting. Here are some tips on how you can start your journey to becoming a first-time homeowner.
Prioritize and Get Out of Debt
Debt is often the biggest financial obstacle for people who want to buy a home. Before you start saving for a down payment, you should focus on paying off any high-interest consumer or credit card debt. Saving for a home with debt hanging over your head is often a losing game. If you’re struggling to overcome your financial burdens, one of our Licensed Insolvency Trustees in Ottawa can point you in the right direction.
Set A Strict Budget
The first step to start saving for a home is to create a budget. This means figuring out exactly how much money is coming in and going out every month. A good starting point is the 50/30/20 budget: 50% of your income should go to needs (rent, groceries, utilities), 30% to wants (hobbies, vacations, going out) and 20% to savings.
We suggest using a budgeting calculator or free mobile app to help you reach your goals. If you’re experiencing financial difficulties and don’t know where to start, we provide personalized debt counselling services to help you overcome your debt and take control of your financial situation.
Getting pre-approved for a mortgage can be a good way to find out how much money you’ll need to save for a down payment. It can also help you get an idea of how much your mortgage payments might be and keep you focused on only looking at properties that are within your budget.
Reduce Spending - Seriously
Your three biggest expenses are likely rent, transportation and food. If you want to start saving, you should look into reducing how much you spend in these three categories. For example, you could rent an apartment in a less trendy neighbourhood, use public transportation instead of owning a car or cook more homemade meals instead of going out to eat. These may not seem like ground-breaking ideas, but over time, they can add up. Saving just $10 a day for one year adds up to $3,650!
Open a TFSA
Putting money into a tax-free savings account is a great way to save money for a down payment. A TFSA allows you to save money and earn interest completely tax-free. Another bonus is that you can withdraw the money when you need it without paying any taxes (unlike with an RRSP).
Over 65 Years of Debt Help in Ottawa And The Surrounding Area
For over 65 years, D. & A. MacLeod Company Ltd. has been a trusted source for debt help and debt counselling in Ottawa. We want to help you gain back control of your finances. If you’re seriously considering buying your first home and need help overcoming financial difficulties, contact us today and get started with a free consultation.