How I Was Able to Save For a Home on a Teacher Salary in My 20s

Growing up, my parents always said the “American Dream” was to become a homeowner. I guess one would say for most of my life I believed the same. I always knew I wanted to become a homeowner but didn’t know when it would happen. Then, at 23, I switched careers and became a teacher. My teacher salary that first year was $34,000 so to be honest, in my mind, I figured it would take at least 10+ years until I was able to purchase my first home.

However, as time passed, I realized how much I was still able to save regardless of my low paying job. That’s when I told myself, I can become a homeowner in less my 20s, even while on a teacher salary. I decided that in order to make this happen I needed to continue doing somethings, while also making some changes.

Fast forward to 3 months before turning 28, I purchased my first home as a single woman living in a city with a high cost of living. This journey took strategic planning and a lot of discipline but overall was a great learning experience for me.

Let’s dive right in.

Tips on how to save for a home payment on a teacher salary:

First: Goal setting.

As I mentioned, at first the idea of becoming a home owner seemed far-fetched for me since I had a low income salary. However, I knew I wanted to become a homeowner one day so I set it as my financial goal. I looked at home prices on Zillow and Trulia to get an idea of how much houses cost. Then, I estimated I would probably need to save anywhere from $60k-$100k before I started house hunting. Now, every time I saved money, I had a purpose to help me stay motivated.

Tip: Having a money goal will help hold you accountable. It will be the driving factor that keeps you going. Ideally, you will want to set a money goal with a specific amount and date you will want the account to be fully funded by.

Second: Decrease spending.

I knew my teacher salary would be in the lower range for a while, as I just started my teaching career. So, I decided to decrease my spending. I knew decreasing my spending was crucial if I was serious about saving up to purchase my first home.

The top expense categories for most people are housing, food, and transportation, so I decided to focus on decreasing my spending on these categories. For housing, I moved back in with my parents after college to save money on rent. For food, I meal- prepped often, and I also limited my dining out to 3x a month. For transportation, I carpooled and took public transportation to help me save additional money.

Tip: Run the numbers to figure out how much you could save monthly if you were to make adjustments to these three spending categories. Then determine where you can decrease your spending based on what’s best for you. Ask yourself what are you willing to change or spend less on to meet your goal to buy a house faster.

Third: Automatic savings transactions.

Every time I got paid, I would send money to my savings account. I didn’t have a set monthly amount, but I always made sure a portion of my paycheck went into my savings. In hindsight, I should have set an automatic monthly savings deposit instead.

Tip: One of the best strategies to save money is to set automatic transfers into an online high-yield savings account. It’s a great way to be consistent and doesn’t involve much work from you. I recommend to increase your automations with every pay raise to increase your savings rate.

Fourth: Decrease Debt.

Focused on decreasing my debt. I paid my monthly student loan payments and always paid off my credit card statement balance in full so that no interest would accrue.

Tip: Decreasing your debt will help your income-to-debt ratio when home shopping for pre-approvals.

Fifth: Increase credit score.

I knew the higher my credit score, the better my home buying process would be. Therefore, I worked on increasing my credit score during this time. I did this by always making sure I paid off my credit card balance in full and on time.

Tip: Having a good credit score can help you lock in better interest rates. Increase your credit score by paying off your credit card balance in full and on time. Also make sure to keep your credit utilization under 10%, ideally 3%.

Sixth: Increased income.

After about a few years, I decided it was time to find ways to increase my income to try to speed up the process. So I started selling clothes online and tutoring on the side to bring in additional income.

I also knew charter schools paid teachers more, so although I worked longer hours, my pay was higher than the average teacher salary in NYC. With this additional income, I was able to increase my savings rate.

Tip: Increasing your income will allow you to save more money, especially when on a low income salary. Try negotiating your salary, applying for a higher-paying job, or starting a side hustle.

Implementing these 6 tips helped me become a homeowner right before I turned 28. Patience and persistence is needed throughout this journey but it is possible. Remember saving up for a home takes time, don’t give up or rush into things. And while I no longer consider owning a home as achieving the “American Dream”, if the numbers make sense, you have the money, and you want to buy a home, then why not.

Now, if you are in the process of buying your first home soon be sure to read my 8 tips for first time home buyers.


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