Money Mistakes to Avoid if You Want to Buy a Home

Purchasing a home is a major financial goal, and many aspiring homeowners save for years to afford it. While saving, ensure you’re doing it right. You may think you’re prepared, but you might be making mistakes that set you back. Here are the money mistakes to avoid if you want to buy a home. 

Not Preparing for Emergencies

An emergency fund is not just a safety net; it’s a source of relief. Life happens, and being prepared can be the difference between a bad few months or complete financial ruin. Having an emergency fund is especially important when working to purchase a home. Owning a home comes with unexpected hiccups, and it all falls on you when you don’t have a landlord or maintenance company to call. Experts recommend aiming to have at least $5,000 saved for emergencies. Ideally, one year’s salary or more is the ultimate preferred emergency fund, which can help during catastrophic events. One small emergency, such as an unexpected vet bill or a broken refrigerator, could cost thousands of dollars. Without an emergency fund, you may have to put these expenses on credit, increasing your debt and making you pay even more in interest. 

Living Beyond Your Means

While a shiny new luxury car might turn heads, if it’s stretching your budget, it could cost you your dream home. Making a habit of living beyond your means can make your finances spiral out of control. Doing this could mean you don’t have a solid down payment or damage your credit score, making it harder to secure a mortgage. Try to stick to the 50/30/20 rule for expenses. This rule recommends putting 50% of your income toward needs, such as rent and utilities. 30% of your income should go toward wants, like takeout, and 20% should go toward savings. Spending too much on wants and not enough on needs or savings could mean you’re living beyond your means.

Not Tracking Your Expenses

Tracking your expenses is not just about budgeting; it’s about taking control. You may think that budgeting is only for people who live paycheck-to-paycheck, but neglecting to budget is a mistake you want to avoid if you’re trying to buy a home. You may be spending more than you think on groceries, subscription services, or takeout. All because you aren’t totaling it up every month! Many free online services help you track all your expenses and even show you where you can save. 

Don’t let yourself fall behind on your homebuying goals because of these money mistakes. Tracking your expenses, living within your means, and keeping an emergency fund can help you stay financially strong. Are you ready to start your homebuying journey? Reach out to a Calcagni Realtor to get started.