Key Tips to Prepare Your Finances Before You Begin Your Home SearchSaving for a new home doesn’t mean giving up everything you love—it starts with identifying intentional spending and reviewing what truly adds value to your life. It can be challenging, especially for millennials, to cut back on comforts like vacations, nights out, premium coffee, or weekly manicures. Instead of cutting them out completely, separate your “must-haves” from your “can-live-withouts,” and plan a realistic budget around those expenses.
Unpack Your Spending Habits
Saving for a home isn’t just about putting money aside—it’s about changing how you think about spending. Much like starting a new health routine, reaching your financial goals means taking a closer look at your daily habits. A great place to start is by reviewing your last three months of spending. Track it all in a spreadsheet or budgeting app to get a real sense of where your money goes.
Break your expenses into two simple categories: Necessary (think housing, groceries, transportation, debt payments) and Other (like eating out, shopping, streaming services, or subscriptions). Start with the basics and see where you might be able to cut back. Even small changes—like cooking more meals at home or cancelling unused memberships—can make a big difference over time.
Many buyers assume that as long as they qualify for a mortgage or stick to the 30% rule, they’re good to go. But that mindset can lead to being “house poor,” where all your income goes toward housing costs with little left for anything else. Adjusting your spending now helps ensure you can still enjoy your lifestyle after you’ve moved in. A few mindful changes today can bring your dream home that much closer.
Nix Unplanned Spending
Unplanned or mindless spending is kryptonite to all but the best-planned budgets. An impulse purchase at the drug store, a new outfit you found on sale, and an impromptu dinner night can dismantle the plan you so carefully laid out for yourself. Realize that sticking to your budget means making intentional choices every day. With your new budget in mind, learn to say no to things you can’t afford. Make plans with friends for the following month and work it into your budget, stop walking into retail stores when you’ve maxed out your shopping budget, and calculate the totals in your head or on your phone before you get to the cash register to avoid unpleasant surprises.
Set Your Budget
Once you understand where you spend the most, set your ideal budget for each category and decide what to cut. Avoid thinking of this as sacrifice—rather, it’s a shift in priorities toward a larger goal. Many activities can continue with proper planning and saving. For example, if your fitness class is essential, reduce expenses elsewhere to cover it. You might bring lunch from home or limit dining out to twice a month. You may also realise you need to increase your income to meet your goals—now’s the time to explore that.
Adjusting your spending habits can take weeks or months, but it’s best done before making the big move. Once your budget is balanced, you’ll better understand what monthly mortgage or rent payment fits your lifestyle.
Love Your Money
One of our favorite finance guru’s Brittney Castro, founder and CEO of Financially Wise Women and an embodiment of the mindful spending movement, reminds us that “being financially wise doesn’t mean giving up your daily latte or the things you love. It means spending your money in alignment with what you value most.” Brittney’s number one tip for staying financially wise is to have a weekly date with your money. Sit down, put on some music, make a tea or pour a glass of wine and review your finances with gratitude and appreciation, not judgment and shame. Make note of where you went wrong this week, and set goals and reminders for the week ahead. Don’t skip your money date. Not only does it ensure you know what’s going on with your hard-earned cash but it also fosters a positive association with your finances, rather than the crippling fear you may have experienced before.
Additional Tips to Get You to Your Goal:
- Set up an automatic transfer of $5 every time you swipe your card to a savings account. Not only will you be more mindful of your spending, knowing it costs you $5 a pop, but at the end of the year, you’ll have a nice chunk of change to add to your down payment.
- If you’re still paying off debt while saving for a home, that extra hurdle requires a bit more attention. Consolidate your debts to the lowest interest rate possible, and work a debt payment schedule into your budget (pay higher-interest debts first if you can’t consolidate everything). Don’t fall into the habit of dumping lump sums into your debt whenever you can without monitoring your payments.
- Meet with a financial advisor at your bank to discuss any fees you may be paying and how to reduce those costs to maximise your money. Switch accounts that don’t best suit your spending habits, and take advantage of any perks they may offer, like rebate rewards or a cashback credit card, higher withdrawal limits without charges, or high-interest savings accounts.
- Make use of online tracking software like Mint to take the guesswork out of tracking your spending in individual categories. You can link your online banking accounts to your preferred app and set budgets for your month in different areas, which will then be tracked for you with each purchase you make, reminding you when you’re reaching your budget limit.
Preparing your finances before you start house hunting will help you approach the market with confidence and clarity. If you’d like to learn more about the homebuying process or need personalized guidance, get in touch with one of our New Home Specialists.