Saving for Homeownership

posted on

October 15, 2025

For most people, buying a home is both an exciting and challenging venture—it is the quintessential American dream. However, because of the high costs involved, saving for home purchase takes commitment, research, and sometimes sacrifice. This fact sheet will provide general information on the costs involved and the types of expenditures you will need to save for in order to buy your first home.

The down payment

The down payment will be the most significant outlay of your pre-purchase costs. The rule used to be that you needed to put down 20% of the purchase price, and you would obtain an 80% mortgage. Today, homebuyers can buy a home with as little as three to five percent down. If you do put less than 20% down, you will probably have to purchase private mortgage insurance, which will cost you between .5% to 1% of the loan amount until your equity reaches the full 20%. Keep in mind that the more you put down, the less your mortgage payment will be.

Earnest money

Earnest money is a cash deposit you make when you submit your offer, which proves to the seller that you are serious about wanting to buy the home. Your real estate broker will deposit the money into an escrow account, and if your offer is accepted, it will be applied towards the down payment. If the offer is rejected, it will be returned to you. Typically, the earnest money deposit will be about two percent of the price of the home.

Closing costs

Closing costs include all fees required to execute the sale transaction, such as attorney fees, title insurance, appraisals, points, and tax escrows. Typically, these fees are paid up front. The average cost is three to five percent of the purchase price.

Post-purchase reserve funds

You may also need to prove to the lender that you have some reserve funds to protect against potential cash flow problems. This not only is assurance for the mortgage holder, but is also for your peace of mind. Post-purchase reserve funds should be at least two to three months’ worth of housing payments. This money is recommended to be in a savings account and accessible without penalties for early withdrawal (though money in a retirement account can also be counted toward the reserve requirement).

Cost breakdown

So how much money will you need to come up with to buy a home? The actual figure depends on many factors. You may have to save more or less for the same home depending on current interest rates, whether you get a fixed or an adjustable rate mortgage, repayment terms, and your credit rating. Other expenditures you may want to save for are landscaping, immediate repairs, redecorating, furnishings (particularly if you are moving into a much larger space), and moving expenses.

Example for a $300,000 Property:

20% Down payment $60,000
3.5% Closing costs $10,500
3 Month reserve fund* $5,625
Total estimated pre-purchase costs $76,125

* $1,875 per month for Principal, Interest, Taxes and Insurance. Example based on a 30-year fixed mortgage, 6% interest, $2,436 annual property tax and $2,796 annual homeowners insurance.

Educate yourself

Obtaining high quality, objective home ownership education is essential for first time homebuyers.

The Department of Housing and Urban Development (HUD) can put you in touch with the nearest housing counseling professional in your area by calling (800) 569-4287. You will learn how to develop a reasonable savings goal and time frame, how large a mortgage you qualify for, and the approximate price range in which you should be looking. You will also be given feedback about your credit score, and what you need to do in order to make improvements. Suggestions may include increasing income, paying down debt, closing unused accounts, paying collection accounts, correcting errors, and making timely payments for a specific time period.

Review your spending plan

Analyze your current financial position by reviewing all assets and liabilities. Do not overlook any source of funds. Include all checking and savings accounts, CDs, stocks, mutual funds and savings bonds. Retirement funds such as a 401k or an IRA can be counted toward the reserve requirement. You may even be able to borrow against your 401k plan and use the proceeds toward the down payment (check with your human resources department for details and restrictions).

Prepare a cash flow spending plan to determine how much you can realistically save each month. You may choose to sacrifice some expenses or delay the purchase of non-essential items in order to meet your monthly goal.

Save effectively

Some good techniques for effective saving include:

Set up direct deposit with your employer, where a portion of your income is siphoned directly to a savings account. What you don’t see, you don’t miss.

Track your spending. Awareness leads to diligence and thrift.

Get the family involved. It is easier to save when everyone is excited and working towards the same goal.

Tape a photo of the home or type of home you are saving for on the refrigerator or computer. It will be a constant reminder of your objective.

Ultimately, saving for a home is a choice. If you find your savings plan to be unfeasible, consider extending the time frame.

Conversely, if you really want to stick with the original time frame, you may want to buy a home that has a smaller purchase price—and buy “up” later. The idea is not to abandon the dream, but to reassess, reorganize, and reengage!

This article is for informational purposes only and is not intended to provide tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors for advice. The payment example displayed above is intended for educational purposes only and does not depict SRP’s current offerings. Membership required. SRP is federally insured by NCUA.

Article Credit: BALANCE 

A jar full of coins next to a notepad for listing monthly expenses.

Five easy ways to cut monthly expenses

posted on

October 1, 2025

Ever notice how your monthly expenses always seem to equal whatever salary you’re making, even after you get raises? The phenomenon is called “lifestyle creep,” and it can keep you from reaching all kinds of financial goals, from paying down debt to saving for retirement.

One way to get lifestyle creep under control is to have any future raises you earn directed into savings. Consider diverting the raise to savings via direct deposit or increase the percentage that you contribute to your retirement account.

While you are waiting on that raise, here are a few things you can do right now to cut your monthly expenses.

Make a budget

The first step toward cutting expenses is to make a budget, so you know exactly where your money is going. Start with major categories, like rent or mortgage, utilities, transportation, meals, clothing, and entertainment. Then break it down even further to ferret out items that are ripe for reducing. Many people, for example, are surprised to learn just how much they pay for pricey lattes and snacks from restaurants and vendors that would cost a fraction of that amount if they were made at home or purchased at a grocery store.

Lower your mortgage payment

The biggest monthly expense for many people is their home mortgage. If you haven’t examined that loan since you bought your home years ago, it’s quite possible that you could save a lot of money – both now and over the life the loan – if you refinance at a lower interest rate. To know whether refinancing makes sense, you’ll need to add what you’ll spend on closing costs into the calculation of your new monthly payment.

Get an insurance checkup

If you have a car, you absolutely must have car insurance. But it pays to shop around periodically to make sure you’re getting the best deal. If you have a decent emergency fund on hand in case of an accident, one way to lower your premiums is to increase your deductible. Also be sure to examine your policy for “extras” you may not need. For example, you could be paying for roadside assistance both through your insurance policy and through AAA.

Examine your auto-payments

Putting your regular bills on auto-payment can be a really smart way to protect your credit rating by ensuring you’re never late with a payment. However, if auto-pay causes you to keep paying for items or services you don’t really need or use, it’s no bargain. A few common culprits include unused gym memberships, subscriptions to magazines that aren’t read, and cable or satellite TV plans that include loads of premium channels that are rarely watched.

Cut the cord

If you’ve already ditched your land line, good for you! If not, doing so is one of the quickest and most pain-free ways to trim your expenses. Most all of us have our cell phones with us all the time anyway, and if you really like the feel of a traditional phone in your hand, a VOIP (Voice Over Internet Protocol) plan that provides phone service over the Internet is a lot cheaper (free in some cases) than traditional land line service.

Article Credit: BALANCE 

A collection of seashells, such as conch, starfish, and clamshells, on smooth white sand.

Money-smart travel: save now, live it up later

posted on

September 1, 2025

When you think about it, planning is one of the best parts of taking an exciting vacation. Putting your dazzling itinerary together and daydreaming about all the amazing things you’ll see can really get the juices flowing. However, if you haven’t planned for the financial impact of your trip, money concerns in the months after your excursion can tarnish your happy memories.

It might seem like a strange time to be thinking about vacationing, but preparing well in advance can help relieve the stress and strain of paying for your travel. That, in turn, frees you up to focus on all the fun parts of getting ready for your excursion.

Here are a few pointers for assembling funds to ease your mind before, during, and after your incredible vacation adventure.

A price tag for paradise

Creating a trip free from financial stress starts with knowing how much the journey will cost. Clear several hours on your schedule to get a complete grasp on the entirety of your outlay. Though it may seem daunting to stare down such a big number, ultimately, it can give you peace of mind knowing you won’t have to worry about months of supersized credit card bills after you return home.

Calculate before you vacate

Once you know the grand total for your getaway, it’s time to start your plan to make it happen! Divide the cost by the number of months until your departure; this is your monthly magic number.

Ponder your pillars

As with so many financial goals, making your adventure a reality comes down to the four pillars of personal finance: expenses, income, assets, and debts. If the monthly magic number is more than what you can currently put toward your vacation fund, don’t fret. It just means you’ll need to make a few adjustments in one or more of the areas below.

Pillar I: Expenses

Planning for your vacation is a terrific time to review your monthly spending plan. Typical areas of emphasis for clearing up space include dining out, entertainment, and subscriptions. But no one knows your situation better than you, so go over your expenditures to see which areas of spending money are a lower priority.

A recent study found that the average American spends $1,200 per vacation. By challenging yourself to trim just $100 per month in expenses, you could potentially pay for a whole extra trip each and every year without having to worry about generating additional income.

Pillar II: Income

This one can be a bit trickier. If you can work a few extra hours at your job, consider using the overtime to rev up your travel fund. But you don’t want to spend 50 weeks of the year miserable just to have two weeks of bliss. Income is an excellent area for creative thinking. What things would you enjoy doing to get more cash rolling in?

Pillar III: Assets

Many people find happiness in accumulating memories instead of material possessions. If you think you might fall into this category, consider bulking up your trip savings by liquidating unwanted items via online auction sites, social media marketplaces, or an old-fashioned garage sale.

Some big-picture thinking might be in order too. If your home or vehicles are more than you need, downsizing your life a bit could mean more magical travel moments in your future and less stress about affording them.

Pillar IV: Debts

When measuring the monthly costs affecting your ability to save, consider the impact of carrying expensive credit card debt from month to month. The interest you pay each month on unsecured debts could help you get to that special place faster or maybe even enjoy a more deluxe experience once you’re there.

Set it and forget it

Trying to remember to put money away for your vacation every month isn’t likely to be your best strategy. Instead, setting up a savings account specifically for your trip and having money automatically deposited from each paycheck into that account gives you a simple and guaranteed way to amass the funds you need.

Frame your mind

Spend all too much time daydreaming about relaxing on that beach or climbing those ancient ruins? You can put that spirit to work for you. First, make the background image on your phone a picture of your dream trip. Then any time you’re tempted to make an impulse purchase, pull out your phone and let the dreamy picture help keep your eyes on the prize.

Flex your flexibility

If circumstances change and you’re just unable to save the monthly amount you initially anticipated, consider pushing back your travel dates. It may be a bummer to think about delaying your getaway, but waiting until you have the money before you travel can mean not having to pay tons of interest on the cost of the trip. Not only does that save you money, but it can also help you take the next trip after this one sooner.

Many happy returns

If you find it challenging to save, there’s no need to feel shame about it. If you use your tax refund each year as your travel fund—and that strategy works for you—keep it up. It’s better to rely on a tax refund than a performance bonus because the latter may or may not happen in any given year.

When you’ve got the financial aspect of your vacation figured out, the fruity drinks taste sweeter, the exotic dishes are more delicious, and the relaxation is more delightful. You deserve that.

This article is for informational purposes only. Membership required. SRP is federally insured by NCUA.

Article Credit: BALANCE

Three stacks of coins of increasing height, topped with a bit of soil and small plant sprouts growing from them, to represent building wealth.

Daily Habits That Make Building Wealth Easier

posted on

June 16, 2025

It is easy to think of wealth as something that happens overnight. The media often emphasizes rags to riches stories, forgetting how rare those scenarios are. News sites share stories of happy lottery winners, reports that overlook the enormous odds ticket buyers face.

Given these misperceptions, it is easy to see why so many people haven’t taken the steps that could help them achieve their financial goals. Goals that may seem unattainable. With discipline and hard work, building wealth is possible. Here are a few strategies and everyday habits that can make wealth building easier.

Pay yourself first

Pay yourself first, or “PYF,” is perhaps the most effective wealth-building habit and one of the easiest to implement. With this simple strategy, you direct part of every paycheck to a savings account, mutual fund, or other investment vehicle, forcing yourself to live on less than you make.

Know how much is in your accounts

There is a reason why financial institutions make so much money on overdraft fees. A shocking number of account holders have no idea how much money is in their account. As a result, they are blindsided when writing a check or withdrawing cash from an ATM sends their balances negative. Knowing how much is in the account is an essential first step toward controlling unexpected costs and taking control of your finances.

Prioritize fee reduction and demand real value for your money

Those who manage to build wealth know that prioritizing fee reduction is a vital first step and that every dollar not spent on management costs is one more dollar that can be invested. The wealthy, and those on their way, always demand value for the money they spend on their investments.

Deposit (or invest) raises, bonuses, and other found money

If you want to build wealth, start by putting bonuses and other found money in a savings account or investing the cash in a mutual fund or other low-cost investment. When wealth builders get extra money, they avoid lifestyle inflation, opting instead to beef up their savings and investment accounts.

Take advantage of tax savings

From 401(k) contributions to IRA accounts to health savings accounts, some types of investments have a double and even triple advantage. One of the most effective ways to build wealth is to prioritize investments that offer tax savings and the promise of tax-free withdrawals. Consult a tax advisor to determine the best strategies for your situation.

Develop multiple streams of income

One of the fastest ways to build wealth is to bring in extra money, which starts with developing multiple income streams. That could be a side hustle, a home-based business, or even rental real estate. The idea is to generate extra cash, money that can be saved and invested.

Save on everyday purchases

People who are successful at building wealth look for ways to save money on everyday purchases. These people choose generic and store-brand products when they go grocery shopping. You might even see them scanning the racks of the local thrift store for gently worn designer duds and used but still pristine furniture and home décor.

Take the long view

Building wealth will be a slow and steady process unless you are the one in several million who buys that winning lottery ticket. If you want to succeed, it pays to adopt the long view, saving consistently, taking calculated risks, and tracking your progress over time.

Conduct an annual financial review

Successful wealth builders know where they stand and where they are going. So they conduct annual reviews of their finances, including emergency savings, investments, insurance, and all other expenses.

Building wealth is not an easy process; in many cases, it is not fast either. If you want to build wealth for the long term, start today, and adopt these smart habits that can help you succeed. The strategies listed above can help you get started, one dollar, and one day, at a time.

Article Credit: BALANCE

A lemonade stand is pictured to represent seasonal income.

Making the Money Work When Your Income is Seasonal

posted on

June 1, 2025

Flexibility, built-in vacation time, freedom—seasonal work has many natural benefits. But it also comes with its own challenges, especially in making its financial side work for you. Most of the available financial advice assumes a steady income stream each month. But that doesn’t help much if you have to plan for extended periods without a lot of cash rolling in.

Use these pointers to make sure your money situation is what you need it to be, no matter the season.

Take advantage of all incentives

With labor shortages common in the US, many employers offer several incentives – from retention bonuses to transportation reimbursement and beyond – so weigh your options and go with the employer offering you the best total package. Keep track of all offers mentioned to make you get everything coming to you.

Know your monthly expenses

This can’t be overstated: the biggest key to successful money management with seasonal work is understanding your baseline monthly expenses. Knowing what you need to survive and have a decent quality of life throughout the year ensures you don’t encounter too many anxious moments when money is tight. Once you know your basic monthly expenses, you can start calculating how much you’ll need each month during your off time.

Do the calculations

Multiply your monthly baseline expenses by the number of months you don’t plan on having income (or much income) over the coming year. Once you have that number, divide it by the number of months you will be working. Now, you know how much you need to save as a bare minimum total during your work stretch.

Utilize multiple savings accounts

In addition to being a time of earning, your heavy work months should also be a time of saving aggressively. To keep all your savings goals straight, set up accounts to stash money for your upcoming monthly expenses and anything else approaching the horizon. That could include vacations, tax obligations, home repairs, or other outlays of cash.

Do a new budget with each transition

On top of diminished income, your life during the times when work isn’t plentiful may have other differences when it comes to expenses. Taking the time to do a new budget each time you transition into and out of your busy work times will help you keep your spending in a place that keeps you safe and secure.

Prioritize emergency savings

With variable income, you’re even more susceptible to the negative effects of a sudden, unexpected expense. Even if you’ve covered all your core expenses, you’re not assured of a smooth transition time until your next larger gig. Without a steady income stream, a big surprise can lead to a big crisis. You may not be able to save enough to cover every emergency right away. Still, putting money away is a good idea to ensure less turbulence when that inevitable curveball comes.

Stay wary of credit card usage

If unforeseen events arise and you find yourself looking to a credit card to cover your necessities, understand that this should be a wakeup call that your finances are in a precarious position. Mounting credit card debt, especially for someone with inconsistent income levels, is not sustainable and should be treated as a sign that significant changes need to be made to your overall financial plan.

Be conscious of stress-related expenses

When you’re in the thick of a busy work season, you’re probably looking to work as many hours as possible. When you have a little time off during this hectic stretch, you might be looking to make the most of your leisure time to blow off some steam. Whether it’s lavish food and drink, a retail therapy session, or another type of splurge, these big spender moments might feel good at the time, but they can be costly to your overall financial wellness in the months ahead. Try to plan some low-cost activities ahead of time for your relaxing hours, so you’re not as tempted to go hog wild.

Time your more considerable expenses carefully

If you’re like many seasonal workers, you may keep yourself motivated during the tougher moments by thoughts of treating yourself once working days are put on hold for a while. It could be a nice trip somewhere or a lovely little gift to yourself. It’s wise, though, to hold off on treat until you’ve done a full assessment of where your money’s at before making a big purchase. You don’t want to start your leisure time by creating a more tenuous financial situation for the months ahead.

Avoid check-cashing businesses

If you get paid with a check for your seasonal work and rely on a check-cashing business to get at your hard-earned money, please reconsider your options. Having a checking and savings account with a local credit union, or bank will help you keep more of that money you put so much effort into earning.

Take advantage of available assistance

Contact your state’s unemployment office to determine if you might be eligible for unemployment benefits during the period in which you’re not employed. Additionally, you may also qualify for help through the Temporary Assistance for Needy Families (TANF) program. For other programs that might be available in your area, dial 211.

Don’t neglect your retirement

Many employers make retirement savings easy with a set-it-and-forget-it plan like a 401(k). Saving for your golden years may be a bit more complicated if you plan on continuing with seasonal work. However, remember that an Individual Retirement Account (IRA) and other options are available. Take advantage of the opportunity to put the power of time to work for you.

Article Credit: BALANCE

Saving for Homeownership

Five easy ways to cut monthly expenses

Make a budget

Lower your mortgage payment

Get an insurance checkup

Examine your auto-payments

Cut the cord

Money-smart travel: save now, live it up later

A price tag for paradise

Calculate before you vacate

Ponder your pillars

Pillar I: Expenses

Pillar II: Income

Pillar III: Assets

Pillar IV: Debts

Set it and forget it

Frame your mind

Flex your flexibility

Many happy returns

Daily Habits That Make Building Wealth Easier

Pay yourself first

Know how much is in your accounts

Prioritize fee reduction and demand real value for your money

Deposit (or invest) raises, bonuses, and other found money

Take advantage of tax savings

Develop multiple streams of income

Save on everyday purchases

Take the long view

Conduct an annual financial review

Making the Money Work When Your Income is Seasonal

Take advantage of all incentives

Know your monthly expenses

Do the calculations

Utilize multiple savings accounts

Do a new budget with each transition

Prioritize emergency savings

Stay wary of credit card usage

Be conscious of stress-related expenses

Time your more considerable expenses carefully

Avoid check-cashing businesses

Take advantage of available assistance

Don’t neglect your retirement

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