My boyfriend has brought up us buying a home together, what do I need to do before I start saving for this?
Buying a home together is a big purchase. Congratulations for wanting to get your financial house in order before you start saving! There are a few things you want to do before you start to discuss making this next step together.
Having enough in emergency savings
I would recommend at least 3-6 months of income for emergency savings set aside for unforeseeable events in your life. Losing your job or going back to school could mean a big impact on your savings. Have enough incase of an emergency
Set up for retirement
Have you paid yourself first? You should be contributing to your 401k and (hopefully) taking advantage of any employer match. Additionally, I would recommend a Roth IRA for a more fruitful long term retirement savings account – plus you only need $5600 a year to max it out.
A Way to monitor your net worth
In addition to having a budget, you will want to start tracking your spending and determining your net worth aka how much you and your stuff amount to in terms of dollars. Not only will this help you with roughly how much potential mortgage you can afford, but you will want to collect all of your spending habits and start recording them. Pen and paper are fine, but you can use Mint.com or Personal Capital for easier tracking.
Set up a separate savings account
You will want to set up an additional savings account for the savings for the house. If you think the purchase is around 1 year out, put it in a high yield savings account, like Ally Bank or Capital One 360. If the purchase is more than a year out, you could look at investing your money to try to grow it in addition to saving. While you will take a small risk, you can get set up with a robo advisor for low cost investment plan.
Let me know how you are doing on your home search and how the saving plan works!
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