Many dream of owning their own home, especially when they start a family. But let's be real—home prices can be pretty steep, often making people hesitant to take the leap. However, buying a home when you're young is totally possible, as long as you know the right strategies.
Here are a few tips you can follow to buy a home at a young age:
The first step in saving for a home is setting a financial target. To make it more manageable and quicker to achieve, you can focus on saving for the down payment (DP) as your initial goal.
Typically, a down payment for a new home is 20% to 30% of the home's price. So, for example, if you're eyeing a house priced at Rp500,000,000, you’ll need to save around Rp100,000,000-Rp150,000,000 for the down payment. The remaining balance can be paid off by applying for a mortgage (KPR).
To make your dream of owning a home come true faster, you’ll need to set aside a portion of your income specifically for it. Generally, the recommended portion of your income to save or invest is about 20% of your monthly earnings. You can allocate a quarter of this 20% specifically for your home’s down payment, while the rest goes toward emergency funds and other savings.
For example, if your monthly salary is Rp10,000,000, then Rp2,000,000 should be set aside for savings. You can allocate Rp500,000 specifically for your home down payment, while the remaining Rp1,500,000 goes to your emergency fund or other savings.
So where should you stash that Rp500,000? You can use various financial technology tools to help “store” your savings. First, you can use locked savings features various digital banks offer to store your money. With this feature, you can keep topping up your savings, but you won’t be able to withdraw the money until the set date.
Second, you can use these savings to invest in financial instruments like stocks or mutual funds. Not only will your money be saved, but you’ll also have the chance to grow it. Stock or mutual fund investors are entitled to dividends and profits from selling their investments. But remember, the higher the potential return, the higher the risk you’ll need to bear.
Want to save for a house even faster? Boost your savings by earning passive income. Unlike active income, which you earn by working directly, passive income keeps coming in—even while you're lying down!
Examples of passive income include participating in affiliate programs, renting out a spare room, or selling photos and vectors on microstock websites or apps. You can then add the extra money you earn to your home savings fund.
There’s an old saying:
Endure the hardships now, so you can enjoy the rewards later.
The fifth tip for saving for a home is to cut down on expenses—especially those that aren’t essential and can be minimized.
For example, you can reduce how often you hang out at cafes with friends and instead save that money for your home. Another example is switching from buying lunch at the office canteen to bringing your own. Little by little, your savings will grow. While it may seem small, if you stick to it consistently, the money you save this way will add up significantly over time.
Want to keep enjoying life but still save money? Use a credit card! Unlike debit or ATM cards, credit cards often come with merchant discounts, reward points that can be exchanged for additional discounts, and more. The savings from these discounts can be added to your home savings fund.
For example, if you spend Rp500,000 on groceries and use a credit card, you might get a 15% discount, saving Rp75,000. That Rp75,000 can go straight into your home savings.
Worried about annual fees and other charges on credit cards? Don’t be! You can use the Honest credit card. As long as you pay your bill on time and in full, you won’t be charged any fees or interest—it’s completely free! But remember, credit card spending should always be done wisely.
Owning a home at a young age isn’t easy, but it’s definitely possible. Preparing your finances to buy a house is the first step you and I can take. Take it slow, as long as you do it carefully, and your dream home won’t just remain a dream.
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