How to save up for a house? It is common for those who first left their family’s nest to make their way in the world by starting to rent a place, be it either with other housemates or on their own. Nonetheless, eventually, anyone would want to settle down with a property to call their own.
However, owning a house is not cheap as National Property Information Center (NAPIC) found in their Q2 2020 Malaysian House Price Index that the house prices in Malaysia averaged at RM427,882.
Age is rarely a factor in buying a property, as shown in the survey conducted by City and Council. About 77.27% of Malaysians as young as 22 to 30 prefer to buy rather than rent. If you’re one of these people and you’re wondering if you can ever have enough money to pay for such a big purchase, we have the solution for you.
Do not fret, because it is possible to save up for your dream house while renting. Just follow these 5 easy tips and you will be well on your way to owning your own home.
1. Stop unnecessary spending.
2. Follow the 50/30/20 rule.
3. Consolidate your debts.
4. Freelance on the fly.
5. Staying in more.
1. Stop Spending On Unnecessary Things
I know it is always tempting to splurge on brand-name products for some self-pampering but ask yourself, do you need it? Do you need a gym pass when there is a park 5 minutes away from your house? Do you need to have that four devices subscription on Netflix when you are only using it for yourself? The answer is NO.
It is usually these spendings that we typically overlook that would take up a big chunk of our spendings. You do not necessarily need to cut off all luxuries in your life but instead set them further apart so that you will not be spending as much.
In the beginning, it will not look like much, but slowly, you will see that you have saved more than you spent.
2. Follow The 50:30:20 Rule
The 50:30:20 ratio is a golden rule when you are either just starting to earn your pay or trying to figure out an improved monthly budget. What is 50/30/20? 50% goes into paying for your needs, such as deciding on your monthly grocery budget, 30% is allocated for your wants which are nonessential items, and 20% goes into savings and your emergency fund.
It can help to avoid overspending and if you feel like saving up more by moving into a cheaper rental, it can even calculate how much rent you could afford with your salary.
However, it is not necessary to completely abide by 50/30/20, it could be 40/30/30 or other ratios as long as your nonessential spending is less than your essentials.
3. Merge Your Debts
Just graduated from college and have student loans debt? Or you have too many credit bills to pay for and cannot afford to save up? Then try merging all your debts.
How do we do that? By taking out a new loan to pay off your other debts. Instead of having multiple separate debts, you now have it all combined into one debt.
Usually, one would find personal loans with either a more favourable interest rate or a lower monthly payback, but sometimes if you are lucky, it has both.
It not only feels less burdensome, but you get to spend less money monthly on paying back debts.
4. Freelance On The Fly
Freelancing is no foreign concept in 2021. There are even websites catering to those who want to earn extra cash on the side. Websites such as Fiverr, Upwork and PeoplePerHour are some of the more popular ones for freelance gigs.
I know it sounds like more work on top of your daily 9 to 5, but unlike a part-time job with a set schedule, YOU get to choose what your working hours are. Do you want to work an hour on that freelance task? Sure, as long as it gets done on time, no one minds how much time you put into it.
The income you earn through freelancing not only helps with your savings, but it increases your spending power too. Just keep in mind that it is not permanent pay before you start committing to things for the long run.
5. Staying In More
Yes, the age-old advice of when you stay in more you spend less and it is true. I know with the COVID-19 pandemic forcing everyone to stay home makes spending more time at home sounds horrid but think of the amount of money you will not be spending.
Going out means having to spend on food, spending on entertainment, and especially if you go on a date, you might want to pay a little extra to impress your significant other. All that becomes additional expenses that you could have saved for a house.
Staying in means little to no extra spending by cooking with ingredients you already have and entertaining yourself with things you already own. Even having a date at your place is possible, you get to bond more with less distraction.
It is still early in the year, it is not too late to start saving up for your dream house, and as 2021 is predicted to be the time that buying property is a good move, these 5 simple tips can guide you to achieving your financial goal.