From groceries to gas, inflation is hitting everyone’s budget. But for those trying to save for a down payment on a house, every penny counts. Don’t let inflation kill your budget and stop you from getting into the home you’ve always wanted. By taking some actions and avoiding others, you can navigate through this period of inflation by taking steps and avoiding others.
It’s best to start by looking at your output and inputs. The first thing to do is analyze your expenses during the first few months of 2021 compared to the first months of 2022. Are you spending more on gas or groceries? If you’re spending more on necessary expenses, you’ll need to consider other ways to cut back. If you’re not spending more, it’s still a good idea to always analyze ways to cut back your spending.
Let’s look at a few ways to do just that.
The first is to cut back on monthly expenses and your discretionary income. These may include streaming services, eating out, turning off lights when you’re not in the room and running appliances during off-peak hours. We’ve all changed our habits since the beginning of the pandemic and may have subscribed to more than one streaming subscription service or even a few food delivery services. In addition, if you haven’t already, you should also look at shopping around for phone plans and insurance rates to see if you’re spending too much. Take a look at your budget by using a budgeting app so you know where your outputs are, which can make this analyzing process easier.
Look at consolidating or paying down debt. You could spend hundreds of dollars each month on interest on credit cards. By paying down your debts, you could gain back that money going toward your savings account. This debt could also be affecting your credit score, so this will be a win from multiple angles.
Put your short-term savings into a high-yield account and invest for long-term savings. If you’re stashing away cash for your down payment, look into a savings account with high yields instead of the average savings rate of 0.06%-0.08%. If you have money that you want to invest long-term, investing in the stock market and bonds is a great way to ride the current inflationary environment.
When you’re ready to talk to someone about how much you should have saved or what the next steps of the mortgage process look like, call us at (877) 448-2745 or visit our website.