Whether you’ve owned a home in the past or are looking to purchase for the first time, saving up for the purchase can be one of the most difficult aspects. We work with members on a daily basis to develop savings plans so they can afford to purchase a home down the road. There are a couple very easy steps that can help you reach your goal of a new home purchase. It all comes down to creating a budget and sticking to it. Below is a simple process on how to develop a budget.

Know what you earn

I like to call this your “Top Line.” It’s the amount of money you bring in before you have any expenses such as a car payment, a mortgage or rent payment, and utility payments. We need this Top Line so we have a starting point for our budget. Sometimes it can be tough to come up with this number if you are only working part time or your hours are inconsistent, but do your best to find a number that closely represents what you bring home every month.

Know where you have to spend

This category involves the bills that have to be paid, so we are going to ignore discretionary spending for the time being. This category is for expenses that happen every month. Some examples include:

• Car payment
• Mortgage/Rent payment
• Payments for utilities such as gas, water, and electrical bills
• Average amount spent on groceries
• Gas for your car

The list could potentially run quite long depending on the amount of monthly payments you have, but the key thing is to know how much will have to pay each month. Of course, utility bills aren’t always the same every month so it’s best to use a high estimate to be safe. We subtract these payments out of our Top Line.

Know how much you need to save

If your goal is to save $12,000 over the course of the year, that means you need to put away $1,000 each month. Again we subtract this from our Top Line. By having a goal we can track how close we are to meeting that goal. By establishing our savings goal into our monthly budget we are able to hold ourselves accountable, rather than making impulse purchases.

What’s Left

The funds that remain are what I like to call discretionary funds. These are the funds that you use for going to dinner with friends, buying that new pair of shoes you’ve had your eye on, or you can always put aside more money. The most important part is that you’re being proactive about saving so you can get into your new home.