5 Ways You Can Actively Save Up for Your Dream Home

Homeownership is a top priority among many working Filipinos, especially those who already have families. In this day and age where rental costs continue to rise, having your own home can offer a sense of stability and permanence. On top of that, many aspire to have a home to pass down to their children, reinforcing the idea of legacy and long-term security.

That’s not to say that the journey to buying a home is often a path riddled with challenges. For one, lots of people struggle to save enough money for a down payment due to low income levels. Others also lack financial literacy, meaning that they aren’t able to fully maximize their savings to help them grow more for a home fund.

Dreaming of owning your own home? With rising rental costs and financial challenges, it may seem almost impossible to save. With the right approach, however, it’s possible to steadily build your funds so that homeownership is within reach. Here are several ways to help you save money more effectively and reach that goal:

1) Create a Dedicated Home Savings Fund

Mixing your home savings with your daily budget may cause you to spend money for your dream home unintentionally. Even if homeownership still seems far away on the horizon, consider opening a separate bank account specifically for this purpose. Doing so will also make it easier to track your savings progress, as there won’t be expenses or constant withdrawals mixed into your transactions.

When choosing a savings account to keep your home savings in, opt for one that yields high interest rates so that you can give your funds a larger boost. Time deposit accounts, for example, allow you to earn higher interest rates on your savings, granted that you keep your money untouched for a fixed period. This may even work in your favor, since those terms will deter you from spending your savings.

You may also opt to sign up for a personal loan in the Philippines to add a larger amount to your home fund. Opt for one that has doable terms so that your debt repayment won’t be an additional burden.

2) Follow a Budget and Cut Unnecessary Expenses

Setting a strict budget that makes no room for unnecessary spending will do a lot to help you set aside more funds for your home savings. To do this, track your monthly income and expenses using a budget tracker or even just a simple spreadsheet. You can then assess each item and determine whether it’s essential or something you can do without.

An example of the latter are subscriptions you’re not using as much. You can also cut out excessive spending on frequent food deliveries and make your own food at home instead.

As a baseline, try to adopt the 50-30-20 rule when budgeting, which goes like this:

• 50% of your income should be for essentials such as rent, bills, food, or transportation.
• 30% can be allotted to wants such as leisure spending or shopping.
• 20% should go to savings, under which your home savings will fall under.

You can also customize this further, such as reducing the percentage for wants so that you can allot more to your home savings instead.

3) Looks for Ways to Diversify Your Income Streams

Another way to boost your savings on your home fund so that you can afford a down payment for your dream home faster is to look for additional income streams. For instance, consider taking on side gigs such as running errands, tutoring, or graphic design to earn extra cash. You can also start a small business from one of your hobbies, like baking pastries and selling them online.

You can also look for clothes or gadgets that you aren’t using anymore, but that are still in good condition, and sell them for quick cash. Just make sure the earnings you get from these side hustles will go straight to your home savings instead of towards unnecessary spending.

4) Invest Wisely to Grow Your Savings

A regular savings account may not be enough, as inflation can outpace its growth. Knowing that, be sure to invest part of your savings to help your money grow faster and work for you over time. You can get started by visiting your bank and asking for possible investment products that suit your needs and risk tolerance.

For instance, investing in mutual funds or UITFs can help your savings earn more with only low to moderate risks involved. These investment products often start at lower minimum investment amounts as well, which will allow you to get started with even just a small investment.

Before you make any investment, however, make sure you’ve done ample research and that you’re dealing with credible institutions such as banks. This will help you avoid getting scammed out of your hard-earned money.

5) Live Within Your Means and Adopt a Frugal Lifestyle

The less you spend now, the more you can save for your future home. That makes it crucial to practice financial discipline in your day-to-day spending, making sure that each peso counts.

One example would be choosing a less expensive, but equally effective brand than the one you usually buy for a household staple. You may also consider cooking at home instead of ordering takeout or taking public transportation instead of using rideshare services frequently.

Living below your means also means letting go of non-essential expenses. If you’re the type who always buys the latest smartphone model, for instance, try to just stick with what you have as long as it’s still functional rather than purchasing a new one just to go with the trend. A frugal lifestyle will allow you to set aside more money to put into your home savings instead.

It will be no small feat to save up for your own home, but with the right strategies, discipline, and patience, that goal will be possible faster than you know it. Apply the tips above and stay consistent, and you’ll eventually be able to buy the dream home that will reward your family and the generations that will come after yours.