How to Set Yourself Up For Financial Success After Buying a Home

Being a homeowner at any age is a financial milestone well worth celebrating. Yet, only 37.8% of Americans under 35 own a home.

While owning a home is an excellent investment, continuing to set yourself up for success will ensure you’re ready for other financial goals like taking a gap year, getting married, or retiring.

Here are a few ways to continue fostering healthy money habits for yourself as a young homeowner. 

Maintain Your Budget After You Buy a Home

You likely already had a budget in place while house hunting. (Pro tip: a solid budget while house shopping can help you determine what you can realistically afford, limiting your mindlessly scrolling of endless unaffordable options on Zillow.) It’s also important to note that the budgeting doesn’t stop once you’ve closed on your house and moved in. It may be tempting to stray, especially once you achieve your goal. However, budgeting is vital to homeownership. Plus, purchasing a home is only one component of homeownership. True, your budget may look a little different as a homeowner, but there are still some basic guiding principles that you can apply. 

Your new budget plan should consider the future. Though it may look like smooth sailing now, you may need to pay for repairs, remodeling, and other maintenance costs down the road. As you adjust your financial plan or create a new one, look for ways to minimize your utility bills and develop a strategy to pay off debt. How you accomplish these things will depend on your circumstances, priorities, and level of discipline. For some, minimizing your bills may be achieved through assistance programs for homeowners. A personal loan could help you avoid paying higher credit card interest when paying off debt or funding home projects. Establishing and maintaining a budget as a homeowner will make life easier regardless of your financial state. 

Consider Long-term Saving Options

Who isn’t looking to save more money? As a new homeowner, you likely already have experience with saving. Perhaps that’s how you covered the down payment on your home. However, did you know that there are various types of savings? Now is the time to start focusing on long-term savings.

What are long-term savings?

“Your savings time-frame matters HUGELY when it comes to investing and saving. Your strategy for the short-term (one to three years) will be a lot different than your long-term (10- to 30-year) strategy. The reason is simple: Most long-term investments (like stocks and stock-based funds) tend to be too risky for short-term objectives. Stock markets rise and fall, and if you’re unlucky enough to need the cash when the market’s tanked, you’re out that investment.”

Maia Monell, Nav.it co-founder

Long-term savings are crucial as you grow your career and eventually move into retirement. If you don’t already have at least one account set up for long-term savings, consider signing up for a separate savings account and retirement fund, such as a 401(k). This will give you a healthy cushion for your spending and future retirement. 

In addition to looking into savings or retirement accounts, you might consider refinancing your home while interest rates are at all-time lows. If you’ve had your home for some time now, refinancing is an easy way to save big on the interest. Whether you lower your mortgage lifetime from a 30-year to a 15-year or use current interest rates to save, these long-term saving options can be beneficial for decades to come.

Diversify Your Income After You Buy a Home

One well-known strategy in the financial industry is the diversification of your funds. Simply put, this means not putting all your income in one investment or savings account. Typically, a homeowner’s wealth is tied to their home. However, by diversifying your income, you can create multiple revenue streams. These could save you from selling or borrowing money against your home if you ever face a financial emergency. Your long-term savings can also come in handy in this regard.

Do a little digging or reach out to a financial advisor to see how you can bring in money from various sources, such as spreading your 401(k) contributions over multiple investments or buying different stocks. Diversification is a simple but effective way of ensuring your money can still grow without relying on a single stock or fund. It may even allow you to extend the life of your emergency fund. 

Look Into Ways To Build Equity

Realistically, you may not decide to stay in your home forever. This is especially true if you’ve recently purchased your very first house. Often, your first place is a starting point rather than your forever home. With that in mind, preparing for your future beyond your current dwelling is important. One way to do that is by building equity. Equity helps ensure that you get a return on your investment. Simply put, this means putting work into your home to increase the property’s value. When you decide to sell your home, getting the most money out of it will allow you to not only finish paying off your mortgage but also give you more money for a down payment on your next home.

Kitchens and bathrooms are commonly the most important rooms prospective buyers will look at. Fresh coats of paint and a landscaped exterior will do wonders. Even a staged home can give you a competitive advantage in the housing market. Do your research in the months leading up to listing your house on the market to ensure you get the most bang for your buck! Before considering selling your home, be mindful of the modifications you make. 

Home improvement projects you take on in the early stages of homeownership can also impact your home’s value. For instance, even something as small as wallpaper could affect the level of interest in your home. While removing wallpaper may be a more straightforward fix before putting the house on the market, is it worth your time, effort, and money? Depending on the answer, you might opt for paint instead of wallpaper, as it can more easily be refreshed before you are ready to sell.

Final Thoughts

There are many ways to set yourself up for long-term financial success. Although owning a home is a significant first step, it’s essential to continue building healthy financial habits that will lead to financial freedom. Now it’s time to start paving the way for your financial future!

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