With the tough economic climate and relatively low incomes in Ghana, buying a new home can be a daunting task for many. Saving money for a house on an average salary can feel like a herculean task. While it may take some time to save up enough for a down payment and closing costs, the easiest way to do this is to automate your savings. BestQuote shares some tips on the way forward:
1. Research home prices
You’ll need to have an idea of how much your ideal home costs before you can figure out how much to save. Whether you’re planning to stay in the same city or move to a new city, research home prices on sites like Meqasa, realtor.com, Broll, or AHG Properties just to mention a few to get a sense of the average price of a house in the city of your choice.
2. Save at least 20% of income
A lot of us find it very difficult to save at all, let alone know how much to save. A guiding principle towards this is to set aside a certain percentage of your monthly income.
Generally, anything from 20% is seen as ideal, becoming a firing table for you to store enough funds to help you buy that dream home. Saving just GH¢50 a month would earn you GH¢600 within a year. Like the adage goes, little drops of water make a mighty ocean so never feel discouraged by the small size of your contributions. You could be owning that very mansion you dream of before you blink!
3. Open a high-yield savings account
Financial experts say the best place to save money for a down payment of a house is on high yielding savings account or money market accounts. Either of these offers higher interest rates than a traditional savings account, helping the money grow while also keeping it accessible and safe.
4. Set up automatic transfers
The key to any sound financial strategy is automation. You should be able to set up automatic transfers from your checking account to your high-yield savings or money market account easily online. Once this is set up, it’s hands-off from there.
5. Make a plan to increase your savings rate, if needed
If you’ve done the math in step four and don’t think you’re able to save that much, don’t panic. There’s nothing wrong with starting small and ramping up your savings amount as you get raises or cut back on expenses.
Maybe you can save GHC200 a month right now, but you are expecting a raise in salary in the next few months, planning to reduce your monthly expenditure, or finally producing income from your side hustle. Commit to increasing your automatic transfers whenever possible, and your house fund will be growing in no time.