One of the largest obstacles to living how we want is usually money, and many Americans are entering adulthood completely unsure of how to save it. These basic saving tactics seem to elude even the most well-educated youth, and we need to find a way to improve both their buying power and their financial IQs.
No one wants to start their lives with a mountain of debt. There are enough ways to do this with tens of thousands of dollars in student loans and the amount needed to furnish even a small apartment. In order to give ourselves a boost in our credit capabilities and our future spending power, it’s important to understand how to save for major purchases.
This also makes it possible for first-time homebuyers to get the houses they need without dealing with the fear of a bank loan rejection, or to get a reliable car from a reputable car lot. As a rule of thumb, remember that it’s always better to be able to pay for necessary life purchases with cash than by taking out a loan that can be both expensive and risky.
Why Save When You Can Get a Loan in Delaware?
Far too many people would rather rely on a bank loan than try and save huge amounts of money independently. The temptation to spend thousands of dollars on fun or expensive things is just too much for some, and this reflects badly on both their level of responsibility and their financial future.
In truth, the more money you can save towards your future vehicle or home, the better off you’ll be. Even if you’re not able to save the necessary amount for the entire house or car, you can still use the amount as a down payment in order to better qualify for a lower interest loan through a bank. The more money you have to put down for something, the better your chances of qualifying for any loan and improves your relationship with the bank for future transactions.
The Delaware economy has suffered just the same as everywhere else in the country. This includes the housing market and the qualifications for any type of loan. It’s become increasingly hard to qualify for a traditional loan without some sort of collateral or down payment. Saving for this is a great way to bypass a lot of the red tape and to improve your chances of getting the money that you need when you need it.
Whether you’re looking at a traditional loan or an alternative lender, it’s important to look at local resources when trying to purchase property in Delaware. There are credit unions and other ways of getting the money you need to fund your major purchases.
Saving for a Home
Saving for your future home may seem a long way off, but it’s one of the most important purchases you’ll ever make. You need to be able to get a home that’s appropriate for you and your future plans. Whether you choose to have a family or to sell the house, you’ll need to be able to get the type of home that acts as an investment instead of a money pit.
When you have bad credit, you’re going to be stuck getting whatever you can find. This could land you in a rental property or in a purchase contract for a house that’s falling apart at the seams. Saving is a good way to make sure that you get what you want and don’t have to settle for less than what you and your family deserve. There are a few great ways to start saving for your home, including:
- Make Saving Normal: Make setting aside money for saving a normal part of your budget. Be sure to incorporate it and treat it like an essential bill. Saving for your future home needs to be a priority and you should never compromise it in order to shave down your budget.
- Don’t Deplete Your Emergency Fund: One of your most important savings accounts will be your emergency fund. This needs to be about three months worth of paychecks and kept at all times to take care of unexpected expenses or a potential job loss. Never include this fund into your housing budget. Saving for your future down payment should only come after you’ve saved enough to populate your emergency fund.
- Come up with an Amount and a Schedule: Coming up with the exact amount you’ll need for down payment can help you to figure out a saving schedule. It’s also a good idea to know when you’ll need that money bite. Try giving yourself at least 2 to 3 years in order to save up around 20% of the overall cost of a home.
- Use an Automated Plan: If you’re one of those people who prefer not to have to worry about allocating funds, then you might want to consider an automatic savings plan. This takes the mystery out of the process and automatically withdrawals a certain amount each payday and deposits it in your savings account.
How Much Do I Really Need for a Car?
When purchasing a vehicle, it helps to save around 25% of the overall cost. It’s also important to know whether or not you want a new or used car. Just remember, a car will depreciate in value while a home will appreciate.
Buying a good car is always a plus, but there’s no need to spend $20,000 on a brand-new model. If you can get one of comparable value at a used car lot, then consider that first. Otherwise, save for a car much like you will a down payment on a home.
Is There a Difference Between Maintenance Savings and Emergency Funds?
The answer to this question is a resounding “yes.” Like we said earlier, your emergency fund should be about three times the amount of your monthly paychecks. This gives you that cushion to protect yourself against future job loss or an immediate emergency.
Savings is an important part of financial health, and not something you should neglect. Contact your bank and ask about the best accounts for you today.