How can I save money to buy a house?

We’re gathering your questions about all things money and finances. Then, each week, we get your questions answered by the people who know best.

This week’s question is from Zayla, who asked:

Marquetta Jackson, a HUD-certified housing counselor at the YWCA Metropolitan Chicago, said you should first figure out when you want to purchase a home.

It will help you establish a timeline for yourself, she said.

“Knowing what area you want to live in [and] understanding the cost for that area, and then after that you want to connect with a homeownership program,” Jackson said.

Organizations like the YWCA Metropolitan Chicago offer free one-on-one counseling and homebuyer education workshops, where participants can also learn how to improve their credit score as well as tips to prevent a foreclosure.

“One of the strategies that we start with is creating a savings plan,” Jackson said. “Let me just be clear, you want to track your net income. I know that when you’re preparing for a house, banks and lenders do look at gross [income], but for yourself when you’re developing a spending plan, you want to look at what you actually bring home.”

Then you can split your expenses using the so-called 50-20-30 rule. Jackson said it means 50% of your income should go toward essentials such as housing, food and utilities. Then 20% of your income would be “to pay yourself” by putting funds into savings and paying down debt, with the remaining 30% spent on nonessential categories like dining out and entertainment.

“It’s important to spend wisely … and also [enjoy] your life within your means,” she said. “So those are the steps: It’s setting goals, it is connecting with a homeownership program and then reviewing finances, building your savings and strengthening your credit.”

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