3 Things You Must Do If You Ever Plan to Buy a Home

Home ownership is part of the American dream that so many millions of people aspire to achieve. But buying a home is becoming more difficult than ever as real estate prices are on the rise, as inflation is growing and as it is becoming more difficult to secure a livable wage.

But buying your own home is possible if you follow some basic rules of personal finance. It will take a lot of hard work, patience and self-discipline, but if you follow these three money strategies below, you’ll be well on your way to becoming a homeowner in the not-so-distant future.

1. Insurance

The first thing you need to do is to protect yourself from future disasters of all kinds. Many people make the mistake of not buying insurance -- or not buying enough insurance -- because they think that they don’t really need it. Don’t be like them.

If you have any assets at all, such as a home or condo, a car, a business or investments in the stock market, then you need to protect your assets with insurance of various kinds. Even if you don’t have a lot of assets, you should still have insurance to protect your future earnings.

If you get into a car accident and injure someone, or if you accidentally leave the water on in your bathroom and flood the apartment below yours, you could be sued for tens of thousands of dollars -- maybe even more. Even if you don’t have any assets, you are still at risk, because you can still have your future paychecks garnished for years to come.

If you want to save up enough money for a down payment on a home, then you cannot afford to lose any of the money or assets that you are working so hard to attain. So consult with an insurance professional. Find out what is a deductible. Learn about the different types of insurance -- what they do and do not cover. And make sure you have enough protection to reach your financial goals in the future.

2. Budget

Next, you need to budget properly to maintain positive cash flow, keep your debt down and live within your means. This is so important. So many people today, both young and old, use credit cards and secured debt to buy things they really don’t need. When you inflate your lifestyle to buy a bunch of stuff now, you are only making it harder to reach your larger goals of home ownership and financial security in the future.

So make a budget and stick to it. Track every dollar you make and every dollar you spend. It’s all numbers. It’s predictable. You should never be caught off guard by a bill or a fee. Make sure that you are spending less money than you make every month, and your dream of owning a home will eventually become a reality.

3. Debt

There are very few things in life that are worth going into debt for. A home is one of them. The latest iPhone is not. To own a home, you need to save a lot of money, increase your net worth and keep your debt in check. Ideally, you would be debt free by the time you are ready to put a down payment on a home. Keeping your debt levels down will push your credit score higher and higher, allowing you to qualify for a larger mortgage and get a home that you really want.

Many people dream of owning a home someday, but their dreams are not likely to come to fruition because they don't’ manage their money properly. If you want to be able to afford a home down the road, then you need to get your finances in order, protect your assets and earning power and eliminate debt as much as possible.