Having a dream house is one of the major goals of many. Everyone wants to live comfortably and escape from the troubles of having a landlord. If you are looking at saving for your dream house, this article is for you.
First, you must have a mental picture of what your dream house looks like. Then, evaluate the cost of the house. The cost will depend on:
- The type of house
- The neighborhood where the house is located
- Real estate appreciation
After figuring these out, the next step is to find out or calculate how much you need to save monthly to buy your dream house.
How to calculate your monthly savings target.
In calculating how much you need to save monthly, you need 3 variables.
What are you saving the money for? In this case, you are saving to buy your dream house.
When do you want to achieve this goal? You must have a time frame in sight. Any goal that is not timed will be difficult to achieve. So, give a timeframe as to when you want to achieve this goal. One key factor that will affect the time is how much you earn. If your earnings are low, then it will take you a much longer time to achieve this goal. For your dream house, let’s assume you want to get it in 5 years, which is 60 months.
How much plus inflation.
How much is the house you want to buy? Let’s assume the house is 10,000,000. Add at least 10% of it to give room for inflation, or any possible hike in the price of real estate. Remember that real estate appreciates. This brings the total amount to 11,000,000
After figuring out the above 3 variables, it’s time to calculate how much you need to save per month. To do that use this formula
Total amount divided by the amount of time (in months)
= 183,334, which you can approximate to 184,000.
This is the amount you should save monthly. If you can not afford to save this, then you have to give yourself more time to achieve this goal.
Why this calculation?
- It helps you know that your goal is realistic and achievable
- It helps you stay on track. If you don’t break your goal this way, you will hardly
While saving, it is advisable to save your money in a platform that guarantees high interest on savings like Reaprite. If you save with the banks, your money will likely reduce due to charges. However, with Reaprite, you enjoy up to 16% interest on your savings. Want to start saving for your dream house? Click here now.