Money-Saving Tips Homebuyers Should Know

By Sam Jarman

Buying a house is one of life’s biggest financial milestones, but it can also be daunting without the right strategies in place. Whether you’re a first-time homebuyer or looking to upgrade, knowing how to save effectively is key. With help from Sam Jarman, Financial Expert and Mercury Content Partner, this guide will help you navigate the path to homeownership with confidence and ease.

What’s the Best Way to Save Money for a House?

If you want to know how to save money for a house, Jarman offers some practical steps you can take to start building your savings.

Immediate Savings Strategies

“The first thing you can control immediately is your spending,” Jarman advises. Here are some actionable tips Jarman suggests to start saving money right away:

• Eat out less: Dining out can quickly add up. By cooking more meals at home, you can greatly reduce your food expenses.
• Carpool: Sharing rides with others can lower transportation costs, save on gas, and reduce vehicle wear and tear.
• Shop around for auto insurance: Comparing auto insurance rates from different providers can help you find more affordable options, potentially saving you hundreds of dollars each year.
• Find a cheaper place to rent: If you’re renting, consider moving to a less expensive location or downsizing your living space to save on monthly rent.

Increasing Your Income

While saving money is essential, Jarman highlights that increasing your income can substantially impact your ability to save for a house. “One of the secrets of the wealthy is they realize that you can make a lot more money faster and bigger by making money than saving money,” Jarman explains. Here are some strategies he recommends:

• Job hopping: Moving to a new company can often result in a notable pay raise. Start interviewing for higher-paying positions and be ready to make the switch.
• Side hustles: Consider taking on a part-time job or freelance work to supplement your income. Even a small side gig can make a big difference in your savings over time.
• High-yield savings accounts: Instead of keeping your savings in a low-interest checking account, move them to a high-yield savings account. This way, you can earn more interest on your savings, accelerating your progress toward your down payment.

How to Budget and Save Money

Creating a budget and sticking to it is a fundamental step in saving money, especially if you’re working towards a major financial goal like buying a house. Here’s how to get started:

Track Your Income and Expenses

The first step in budgeting is understanding where your money is coming from and where it’s going. Here’s how you can do it:

• List your income: Include all sources of income, such as your salary, freelance work, side gigs, and any other money coming in regularly.
• Categorize your expenses: Divide your expenses into categories like housing, utilities, groceries, transportation, entertainment, and miscellaneous. This will help you see exactly how much you spend in each area.

Set a Realistic Budget

Once you have a clear picture of your income and expenses, it’s time to create a budget:

• Set spending limits: Based on your categorized expenses, set realistic spending limits for each category. Make sure these limits align with your income.
• Prioritize savings: Treat your savings like a non-negotiable expense. Decide on a specific amount or percentage of your income to save each month and include it in your budget. Also, set up automatic transfers from your checking account to your savings account. This way, you won’t forget to save, and you’ll be less tempted to spend the money.

Review and Adjust Your Budget

Regularly reviewing your budget is crucial for staying on track:

• Monthly reviews: At the end of each month, compare your actual spending to your budget. Identify any areas where you overspent and find ways to adjust.
• Adjust as needed: Life changes, and so do your financial needs. Be flexible and adjust your budget as necessary to accommodate changes in income, expenses, or savings goals.

How Can I Save on Utilities?

Saving on utilities is a great way to reduce your monthly expenses and make your home more energy-efficient. Jarman offers several practical tips to help you learn how to save on utilities:

Improve Home Insulation

Good insulation is crucial for maintaining energy efficiency in your home. Jarman emphasizes, “Getting a newer home that has been insulated well makes a massive difference. It’s amazing to me what a good insulated house does for your utility bill versus a bad insulated house.” Here are some steps you can take to improve insulation:

• Upgrade windows: Replace old, drafty windows with energy-efficient ones to prevent heat loss in the winter and keep your home cooler in the summer.
• Add insulation: If you own an older home, consider adding additional insulation to your walls and attic. Hiring a professional to retrofit your home can make a massive difference in your utility costs.

Optimize Thermostat Settings

Adjusting your thermostat settings can lead to substantial savings. Jarman recommends keeping the thermostat at 75 degrees in the summer and 66 degrees in the winter to help reduce your heating and cooling costs. Here are some additional tips:

• Dress accordingly: In the summer, wear lighter clothing indoors, and in the winter, layer up with long sleeves and sweatshirts instead of increasing the heat.
• Use programmable thermostats: Programmable thermostats can automatically adjust the temperature based on your schedule, ensuring you’re not wasting energy when you’re not home.

Maximize Natural Light

Using natural light during the day can reduce your electricity consumption. Jarman shares, “I keep my lights off when I’m not using them. Why do I need to have all the artificial lights on in my house when it’s daytime, and I can just open up the blinds and let natural light in? Little things like this add up.”

So, during daylight hours, open your blinds and curtains to let in as much natural light as possible. Additionally, place mirrors opposite your windows to reflect light and brighten up your space without using artificial lighting.

In the Current Market, Is It Better to Rent or Buy a House?

The decision between renting vs. purchasing a house is a major one and depends on various factors. Here’s an analysis to help you decide what might be best for you in the current market.

Financial Considerations

• Upfront costs: Buying requires a down payment and closing costs, while renting typically involves a security deposit and the first month’s rent.
• Monthly expenses: Homeownership includes mortgage payments, taxes, and maintenance. Renting usually has lower monthly costs and fewer responsibilities.

Market Conditions

• Housing prices: In a hot real estate market with rapidly rising prices, buying a house can be more expensive and competitive. In such cases, renting may be a more affordable and less stressful option.
• Interest rates: Low mortgage interest rates can make purchasing a house more attractive by reducing long-term borrowing costs. Conversely, high interest rates can make buying less appealing and renting a more viable short-term solution.

Lifestyle and Flexibility

• Stability vs. flexibility: Buying offers stability and equity building but ties you to one location. Renting allows for easier relocation.
• Maintenance and repairs: Homeowners handle maintenance and repairs, while renters typically have landlords to manage these tasks.

Long-Term Goals

• Equity and investment: Buying a home can be a good investment with equity and appreciation potential. Renting allows for investment in other areas like stocks.
• Family stability: Owning a home in a good school district offers stability, whereas renting provides flexibility for changing needs.

How Can I Best Protect My Assets from an Unforeseen Disaster?

Protecting your assets from unforeseen disasters is crucial for maintaining financial stability. One of the most effective ways to do this is by understanding and investing in appropriate insurance coverage. Here’s how you can best protect your assets:

Understand What Homeowners Insurance Covers

To safeguard your home and possessions, it’s important to ask, "What does homeowners insurance cover?" Typically, it includes:

• Property damage: Covers damage to your home from events like fire, storms, and vandalism.
• Personal belongings: Protects items such as furniture, electronics, and clothing from theft or damage.
• Liability coverage: Offers protection if someone is injured on your property and sues.
• Additional living expenses: Pays for temporary housing if your home is uninhabitable due to a covered event.

Evaluate Additional Coverage Options

Standard homeowners insurance might not cover all potential risks. Consider these additional policies for comprehensive protection:

• Flood insurance: This is essential if you live in a flood-prone area, as standard policies usually don’t cover flood damage.
• Earthquake insurance: This is necessary in regions susceptible to earthquakes, providing coverage for damages caused by seismic activity.
• Umbrella insurance: Offers extra liability coverage beyond the limits of your homeowners and auto policies, protecting you from significant financial loss.

Maintain an Emergency Fund

In addition to insurance, having an emergency fund can help you manage unexpected expenses and cover deductibles following a disaster. Jarman recommends, “People should have at least six months of monthly expenses for an emergency fund. That’s the minimum. If you could have a year, great, but you can still make the payment on the house, car, and all of your essentials with six months.”

Conduct Regular Home Maintenance

Preventative maintenance can reduce the risk of damage from unforeseen disasters, including:

• Roof inspections: Check for and repair any damage to prevent leaks and water damage.
• Tree trimming: Remove dead or overhanging branches that could fall and cause damage during a storm.
• Foundation checks: Ensure your home’s foundation is stable and address any cracks or weaknesses promptly.

Conclusion

Saving for a house requires a combination of strategic saving, budgeting, and income growth. By following the practical steps provided by Sam Jarman, you can start building your savings effectively. When it’s time to buy a house, make sure you get homeowners insurance from Mercury. Our comprehensive coverage will protect your new investment against unforeseen disasters, giving you peace of mind as you settle into your new home.

Contact us today for a fast, free quote!