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Navigating the financial challenges of saving for a home while starting a family can be daunting.
To help you find a balance, we’ve gathered ten insightful tips from CEOs, business owners, and financial experts.
From creating a realistic family budget to exercising patience and smart spending, let’s explore these strategies to help you achieve your financial goals.
- Create a Realistic Family Budget
- Leverage First-Time Homebuyer Programs
- Reevaluate Spending Habits
- Establish Separate Accounts for Goals
- Prioritize Consistent Savings and Budgeting
- Consider the “House Hacking” Strategy
- Avoid Lifestyle Creep, Automate Savings
- Trim Expenses, Seek Additional Income
- Explore Alternative Homeownership Strategies
- Exercise Patience and Smart Spending
Create a Realistic Family Budget
My top tip for balancing the financial goal of saving for a home while starting a family is to create a realistic budget. Take the time to review your current budget and account for earnings, current expenses, and estimates for future expenses. Kids are expensive: they can cost $20k or more in the first year alone.
Your priority is to keep your kid safe, fed, and loved. Kids don’t care if you’re a homeowner. Once you have a good sense of what you’re doing with your money each month, put aside a reasonable amount each month to save for your home.
If you’re a few months out from buying, consider investing the funds in something with a fixed interest rate, such as a CD. It’s safer than investing in the stock market and has a higher return than most savings accounts. — Jeremy Grant, Founder and CEO, Knocked-up Money
Leverage First-Time Homebuyer Programs
First-time homebuyer programs are designed to make homeownership more affordable and accessible. These programs provide benefits like down payment assistance, lower interest rates, or reduced closing costs.
Research and identify the programs available in your area, offered by government entities or local financial institutions. Eligibility criteria may include income limits or credit score requirements, but many programs have flexible guidelines. If it all seems overwhelming, work with a knowledgeable mortgage lender or loan officer to navigate these programs effectively. — Mike Roberts, Co-founder, City Creek Mortgage
Reevaluate Spending Habits
Sit down and have a priorities conversation. Are you spending a lot of money in areas that don’t actually make you happy, just because you’ve always had the income to afford it? Just because you can, doesn’t mean you should.
Of the three to four things you spend lavishly on, what if you kept only one of those things — whichever makes you very happy to spend lavishly on it — and you downgraded the rest?
Every family can find at least one area of money being spent every month that doesn’t nearly matter that much to them but has become a habit. Which ones bring you true joy, and which ones have just become “the way we do it”? — Alex Boyd, Owner, Mindfully Investing
Establish Separate Accounts for Goals
The one tip I recommend for balancing the financial goals of saving for a home while starting a family is to have different accounts for each goal. I started doing this after reading The Richest Man in Babylon.
I started by saving 10% of my income, then divided everything else to pay for household bills and debts. After a few months, I increased this amount to 12%, then 15%, until I hit 35%.
This strategy helped me understand the importance of knowing where my money went. Thus, I started budgeting and buying a lot without compromising the comfort of my family. It also challenged me to work hard on my side hustle to earn more money. — Shalom Kamau, Freelance Parenting Writer, Active Little Feet
Prioritize Consistent Savings and Budgeting
Saving for a home while also starting a family can be challenging but not necessarily complicated. One practical tip to help you through the process is to save a consistent portion of your paycheck as soon as you receive it. Rather than putting aside whatever is left after your monthly expenses, save a portion of your monthly salary as soon as you receive it.
You may create a budget to get a clear picture of how much money is being spent on both necessary and discretionary items. When creating a budget, you must account for both regular and one-time expenses.
Ideally, spending less leads to savings. So make changes as you see appropriate and cut down on expenses that are not necessary.
Once you have the amount you can save from your monthly paycheck, put it in a separate savings account dedicated solely to the goal. You can also put on autopay to ensure you consistently save the same portion of your paycheck each month. — Lyle Solomon, Principal Attorney, Oak View Law Group
Consider the “House Hacking” Strategy
From my personal experience, the trick is to be smart about your investments. One strategy I highly recommend is “house hacking.” This is when you buy a property, live in one part of it, and rent out the other parts to offset your mortgage costs.
I personally did that and the rental income significantly helped us manage our mortgage payments, which allowed us to save more for our future home while simultaneously preparing for our family. It was a practical approach that helped us balance our financial goal of saving for a home with the aspiration of starting a family. — Rabea Elias, Business Head, Almowafir
Avoid Lifestyle Creep, Automate Savings
When most people earn more, they spend more. But engaging in “lifestyle creep” will doom your goal of saving for a home, especially while starting a family.
Instead of short-term rewards, play the long game by maintaining your current standard of living and earmarking any additional income into a savings account to save for a home. Set up automatic deposits or transfers from your checking account to ensure you follow through on your good intentions.
You can also be proactive in pursuing savings opportunities. Review your budget regularly. Stop paying for services you rarely or never use, such as streaming platforms. And comparison shop on big-budget expenditures such as auto insurance. Switching to another insurance provider could save you several hundred dollars annually. — Michelle Robbins, Licensed Insurance Agent, Clearsurance.com
Trim Expenses, Seek Additional Income
Look for ways to trim expenses and save money to accelerate your home savings. Evaluate your current living situation and consider options like downsizing, renting a more affordable place temporarily, or living with family members to reduce housing costs.
Explore opportunities to cut back on discretionary expenses like dining out, entertainment, or subscriptions. Redirect the savings towards your home fund, bringing you closer to your homeownership goal.
Seek additional income streams: Consider exploring additional income streams to boost your savings. — Doug Van Soest, Cofounder, SoCal Home Buyers
Explore Alternative Homeownership Strategies
Saving for a down payment on a home while starting a family can be daunting, but there are other ways to achieve your goal.
One option is to explore government programs or grants that offer assistance with down payments. Consider shared ownership or rent-to-buy agreements as alternative options. Another way is to purchase a fixer-upper property that needs some work and renovate it gradually while living there.
This approach spreads the costs of homeownership over an extended period, providing ample time to adjust to the financial responsibilities that come with starting a family. — Peter Lucas, Owner, Relocate to Andorra
Exercise Patience and Smart Spending
When looking to balance your goals of saving for a home with the responsibilities of starting a family, you must be patient. Unless you hit the lottery or came into some money, it’s going to take some time.
What you have to do is figure out what financial responsibilities you have in your everyday life while growing your family. You need to stay on top of those responsibilities, but make sure you are smart with the remaining money each month. Even if it is a small amount, it can add up over time.
As you save up to purchase a home, you also might have to make some sacrifices in where you live and for how long. If you are spending top dollar on rent, then that will dip into your savings. Instead, find an affordable (but safe and reliable) place to live that is more reasonable. Also, as much as it might hurt, if you have family who can help out or maybe even let you stay with them, that can also help in a big way! — Patrick Caramalac, Founder and CEO, Best Fit Movers
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