Para la mayoría de las personas, la compra de una casa supone un esfuerzo económico importante. El desembolso principal debe hacerse al principio, para afrontar los gastos iniciales y la entrada, de forma que a partir de ahí se pueda terminar de pagar durante los años siguientes gracias a la firma de una hipoteca. Un proceso, por tanto, que nos invita a ser precavidos y a establecer previamente fórmulas de ahorro para tener acceso al dinero a la hora de la verdad y poder recibir las deseadas llaves.
Saving Now Is More Important Than Ever Given the Rising Cost of Living
It’s a fact that saving money today is harder than it was a couple of years ago. Food prices ended December 2022 with a 15.7% annual increase, the highest rate since 1994. Meanwhile, the CPI increase for clothing and footwear was 1.8%, a figure that skyrocketed in January 2023, doubling to 3.6%.
Given these figures, it is not surprising that inflation ended 2022 at 5.7% and that the annual average rate of price increases during that year was 8.4%—the highest figure since 1986. This very difficult economic environment also had an impact on the housing market, as the average home price rose by 8.1% over the 12 months of 2022.
So, even if we’re determined to save, it’s not easy to put that into practice these days. Debt, expenses for basic needs, leisure activities, and so on can make it very difficult to save money for the future, so today at CULMIA we’re offering a series of tips to help you save efficiently for a home.
Things to Consider Before You Start Saving
If our goal is to own a home at some point in our lives, it’s best to start saving as soon as possible. Landing your first job can be a good time to start, as long as it provides you with enough financial independence to cover your basic needs (rent and related expenses, food, clothing, etc.).
In addition, one of the questions we should ask ourselves when considering these savings is (approximately) how much money we’ll need in the future to buy a home that meets our needs. This can be somewhat difficult to determine several years in advance, but we can make a simple calculation to help us establish some minimum figures.
In this regard, it’s important to keep in mind that about 20–30% of the total cost of a home must be paid up front as a down payment, while the remaining 80–70% can be paid later in installments through the mortgage. And that’s not all, because you’ll also need to set aside another 10–12% of the home’s value to cover expenses related to the purchase, such as notary, registration, and administrative fees, as well as VAT and property transfer tax (the latter, if it is a resale home).
The final amount you should aim to save will depend on various factors, such as the location of the home, its features, whether it’s new or pre-owned, and, of course, the percentage of financing you’re able to secure for it. Not to mention that it will also depend on your future plans—whether you plan to buy the home with someone else (sharing the costs) or, on the other hand, take on this “adventure” on your own.
What will be the average mortgage costs we’ll have to pay?
In 2022, mortgage costs doubled due to the various interest rate hikes the European Central Bank had to implement in the second half of the year to curb inflation. In fact, the Euribor is currently (3.978% in March 2023) at its highest level in the last decade, which is affecting both variable-rate and fixed-rate mortgages, although the impact is much more severe for the former.
Furthermore, all signs point to the price of these mortgage loans continuing to rise in the short term. Therefore, before we set out to buy a new home, it’s important to calculate how much money we’ll need to set aside each month to repay the bank loan. This is something we can do very easily with our mortgage calculator.
Tips for Saving to Buy a Home
Once we have a clear idea of roughly how much money we need to save to buy a home with the features we’re looking for, we can define our strategy. Logically, the fundamental premise is to reduce and adjust our expenses so we don’t waste money on unnecessary needs or activities—that is, things that don’t really add any value to our lives.
Here are somepractical tips to help you achieve this:
Paying Off Debts
If we have outstanding payments, it’s a good idea to pay them off as soon as possible. As long as these debts exist, they will hinder our savings efforts, since they will disrupt our finances and may even end up affecting our financial situation for long periods of time.
Analyze our accounts
It’s impossible to make decisions aimed at saving money if we don’t first understand our financial health. To do this, we can sit down and calmly calculate how much money we bring in each month and how much we spend (approximately). Next, we can analyze our expenses in detail, categorizing them based on the needs they fulfill: basic (housing, food, clothing, transportation, etc.) and discretionary ( leisure activities, eating out, gym membership, service subscriptions, etc.).
Apply the 50/30/20 rule
Saving doesn’t necessarily mean giving up some of the “treats” we want to treat ourselves to. In other words, if we really like a particular streaming service, we can keep our subscription without compromising our savings plan. The key is to allocate the right amount of money to each category and stick to this “rule” to the letter.
One very interesting option is the so-called “50/30/20” rule. This rule encourages us to allocate 50% of our income to basic needs, 30% to discretionary spending, and 20% to savings. However, we can always adjust the amounts allocated to the latter two categories based on our individual circumstances: for example, instead of spending 30% on “treats,” we could allocate 20% and add the remaining 10% to our savings.
Track expenses and income on a monthly basis
If we don’t keep track of our finances on a regular basis, we may very well fail to achieve the goals we set for ourselves at the beginning. It’s normal to have dozens of expenses each month, so writing them down regularly will let us know where we stand at any given time and how much money we have left to spend on non-essential activities, such as going to the movies or having lunch with friends.
To do this properly, we no longer need a pen or paper or to create a complicated Excel spreadsheet. That’s because there are plenty of specialized apps that can help us track our expenses and manage our household finances.
Shop Wisely
Sometimes, we can save money without giving up any of the things we’ve been doing or buying as usual. How? It’s very simple: by choosing more affordable products that offer similar quality. We’re talking, for example, about prioritizing generic brands over name-brand products, looking for deals on secondhand items that are in good condition, shopping at supermarkets that offer the best prices, and so on.
Take on a second job that provides us with extra income
We can also consider finding a second source of income that doesn’t take up too much of our time. Activities such as helping out a family member or neighbor, giving private lessons, coaching a sports team, or participating in a choir or orchestra, making and selling crafts, etc., could make it much easier for us to reach our savings goals.
Take advantage of the solutions offered by banks
In addition to all this, we also have the option of seeking help from a bank or a financial advisor to save more easily. Obviously, these solutions come with an added cost, but they may be worth it. Among the options banks offer are savings accounts, time deposits, and even mutual funds, each with different ways to save our money and make it grow.
What do you think of these tips for saving up to buy a house?
Start putting these tips into practice, and you’ll see how your “piggy bank” fills up much faster!
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