This article is a short guide for middle-low income earners on how to save for a house, within just a couple of years.
It has become quite difficult for an average Nigerian to own a home; not with this present economy.
With the current economy, saving for a home in a short while as become twice as difficult and not as viable as it used to be. Some people might have to save for as long as 10 years to be able to afford something they might want to live in.
You are not the only one who’d love to own a property to call your own but doesn’t have a pile of cash lying around to finance the purchase.
The struggle is real, believe me.
However, if you want to buy a house in the near future, there’s still a way for you, but it means you would have to build up some serious savings.
Here are 10 simple steps to help you do just that:
- 1 How To Save For a House In Nigeria
- 1.1 Conclusion
How To Save For a House In Nigeria
1. Create a monthly budget.
You build savings by spending less than you earn. Therefore, any financial goals begin and end with your monthly family budget. It’s important to be both honest and realistic about your spending habits out of the gate, and then stick with your fixed plan as much as possible.
Electronic payments is a great tool here, because then your payments take care of themselves. Another option is to print out a list of your monthly expenses and check them off — both to make sure they get paid, but also to have the satisfaction of knowing you are on track.
2. Quarantine your savings.
Many people have trouble saving money because they simply see a lot of zeros in their bank account and assume that they are comfortably on track when they are not — or that they have wiggle room to spend. The simplest way to avoid this is to create a dedicated bank account just for your housing fund, and then quarantine it from any spending.
You’ll still have your regular current account and debit cards to pay your rent, NEPA bills and general upkeep, but that special savings account is off-limits no matter what.
3. Make savings automatic.
Once you have a dedicated savings account, tell your Human Resource department that you want a fixed amount sent there every payday via direct deposit and the remaining balance sent to your regular account as usual.
The savings will happen regularly this way, and you won’t even notice as long as you’ve built a good family budget. The idea, as personal finance gurus like to say, is to pay yourself first so there’s no excuses.
Another way you can do this if you don’t want people in your HR department knowing your personal business, is to use the Piggy Bank app. It is an application you can easily install from Google Playstore on any android phone.
The Application allows you to AutoSave from your directly from your salary account every month into your savings account. It works exactly like a standing order.
Once your Salary drops in your account, it immediately removes the amount you have pre-specified for savings and deposits it in your savings account. Pretty Easy, right?
4. Save 100% of any Extra Cash.
Did you get some free unexpected cash from anyone or a nice year-end bonus from your employer?
While it’s very tempting to splurge a little even as you save a little; building up a down payment requires a lot of restraint.
That applies both to your day-to-day expenses, as well as one-time infusions of cash. After all, if you’ve built a good budget, then you don’t really “need” any of that money … so it’s perfect for saving.
5. Save in big chunks.
Sure, you can save a few thousands each week by eating more moderately than you’re used to .
But you can make the biggest impact by cutting out the biggest expenses. Skipping your annual vacation won’t be easy, and that rusty old car with the broken mirror may be a bit embarrassing to drive for another year … but snatching big bills where you can instead of pinching pennies is an effective way to build up savings quickly
6. Slash your rent
Rent probably takes the biggest bite when it comes to our budget. Moving to a one-bedroom apartment from a two-bedroom apartment can drop your rent by 20% to 30% in most areas.
If you don’t have kids, it may be a smart move to live small before you move into your new home and then reallocate the unused rent into your housing fund.
7. Rethink what’s essential
To help reduce your spending costs, you need to have a rethink of what you really need. When it comes to budgeting, even having a car (or an extra car) should be up for debate.
Can you live without your own set of wheels for a year? If you live in a city or walkable neighbourhood, give public transportation or ride to work with a friend. You might be surprised by how much money you can save by ditching a car.
8. Find a side hustle and work harder
Spending less is the obvious way to save, but working more and bringing home more money is also a great way to supercharge your savings. If you are eligible for overtime or additional work, take every opportunity that comes your way.
And if you’re not, consider taking a second job on the side even if it’s only a few days or a few projects each month. Consider developing a side hustle and turn that into a strong income stream.
9. Build A Support System
Much like going on a diet, staying on a strict savings plan is much easier with the support of the people around you.
If your buddies are always inviting you to happy hour or your friends invites you shopping each weekend, the temptation and stress are going to be an issue.
Make sure your friends and family know how your behavior is changing so they can meet you halfway.
On a final note, i will like to say that you shouldn’t punish yourself all in the name of saving.
The math of saving for a house may be straightforward, but the emotions of saving are very complex. If saving feels painful or frustrating every single day, you’re much less likely to be successful at it.
So, rather than let the frustration build up after you deny yourself every discretionary expense, take comfort in a simple pleasure once in a while. Cut down on eating out, but consider cooking a fancy and delicious dinner for yourself once a week at home. Cut down on going to movies, but perhaps subscribe to Netflix instead.
The idea is to save money, not to spend zero, and you will find it much easier to save if you’re actually enjoying your life while doing so.