Spring is all about renewal. Most people equate this with giving their home a deep clean, but you can also do the same for your finances. If you’re planning on buying a new home soon, tidying up your finances is a smart move.
Giving your finances a deep cleaning will set you up for financial success. Here’s a guide for making it happen.
Spruce up your financial goals
You wouldn’t start a road trip without knowing where you’re going, right? Likewise, you need to determine your motivation for getting your finances in order. Whether you simply want to improve your financial stability, save for your retirement, or to buy a new home, it’s important to set clear goals for how you want your money to work for you. Figuring out your target goals will keep you focused throughout the year.
If you’ve previously set some financial goals, now is the perfect time to revisit them and see how you’re progressing. Check to see if the goal still makes sense or make new ones if they no longer serve your needs. Monitor your progress to make sure you’re still on track or if you need to readjust your priorities, spending, or savings/investments to get back on track.
Uncover your credit score
Now that you’ve determined your goals, it’s time to find out where you currently stand. This isn’t always fun but it’s a necessary step. Request and review your credit report (you’re entitled to a free credit report every 12 months. You can request your report at AnnualCreditReport.com) to understand your personal credit history and buying power.
While the minimum credit score you need to qualify for a loan will depend on your lender and the type of loan program you use, here’s a general idea of what to expect. If your credit score is a little lower than you’d like, here are some ways you can improve your credit score.
Dust off your budget
Budgeting gets a bad rap for being restrictive, but a budget is essential to your financial success. There are several different budgeting methods you can choose from. Since there’s no single method that works for everyone, take time to compare each one and choose the option that works best for you. Choosing a budget method that fits into your lifestyle will improve your chances of success.
Once you choose your budget method, make it a point to consistently review your budget. This will help you keep track of your spending habits, stay on top of your expenses and bills, and reach your financial goals.
Clear your debt
There are several benefits of paying down debt: it frees you up to focus on saving and other financial goals, it improves your credit score, and it reduces the amount of interest you pay over time, thus saving additional money. To effectively pay off your debt (or get closer to being debt-free), create or choose a debt payoff plan that works best for you.
Sweep through your spending
Review your bank statements to see where you’re spending your money and see if your current spending still makes sense. Cancel any subscriptions or memberships you rarely use and see if there are more affordable options of services and subscriptions you do use.
Save for the future
The final step is to make a plan for your savings, whether you’re saving for a down payment, an emergency fund, or some other milestone. If possible, automate your savings and investments to make sure you’re setting aside that money so you can watch your savings accumulate.
We’re ready to help whenever you’re ready to start your homebuying journey! We build new homes for every stage in life in Oregon, Washington, Idaho, and Montana. Contact us to get started with building your new home!