Did you wait until you were married and had a family before buying a home? Don’t worry; that’s what I did as well. Having a family definitely changes the dynamic of saving for a home, but it gives you two distinct advantages.
First, your family gives you the drive and determination to succeed in saving for a house down payment. Second, it clarifies what you actually need in a home.
Welcome back to the Saving for a House Down Payment series (part 1, part 2, part 3, part 4), where we discuss how to save in any situation.
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Understanding the pitfalls of saving with a family. Understanding your unique situation is the most challenging part of saving with a family.
Raising a family is the most expensive thing you can do in America. Everyone wants your money; you’ll have to spend money to survive, entertain, and protect.
If you don’t truly appreciate the gravity of your situation, read “The American Dream Costs $5 Million.” This article will explain why you must take this milestone in life seriously.
Luckily, you live in a small town and can afford to get ahead in life. Trust me; after living in San Diego for three months, I greatly appreciate my life in small cities.
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Saving versus entertaining. It’s tough to save while entertaining your family. After a long work week, both parents need a reprieve from the house.
Daycare is expensive, work sucks, the house is cramped, and you’re tired of home cooking. It’s effortless to blow a lot of money on the weekends traveling to event destinations, county fairs, and local zoos.
However, while saving for a down payment, entertainment is the most manageable portion of your budget to control. If your kids are small, it is much easier to keep them happy by going to parks, driving downtown to see the lights, or getting ice cream.
Don’t underestimate the costs of raising kids. You’ll need to factor in all sorts of expenses you cannot fathom when starting. My boys are 15 and 11, and I can confirm that kids will cost you, especially if you are shopping for brand-new products.
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Reduce children’s costs. It’s okay to shop at a second-hand store. You don’t want to buy a second-hand car seat (because it may have been in an accident), but other than that, you can be creative.
Living in a small city reduces the competition between parents. It’s hard to save when your kids are wearing expensive clothes and shoes and you are driving a $100,000 Lincoln Navigator. I see these things here in San Diego every day.
You may be able to reduce childcare costs in a few ways. First, you can homeschool your children, which is something I wish I could have done. Trust me; you can get better results than the school system (public or private).
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If you have a trusted family member, maybe you can offer a free room in exchange for childcare. Perhaps they can go to night school or attend college online. We all need to get creative to survive in this world.
Wages in a small city. The good part of living in a small town is the small cost of living. The bad part of living in a small town is the small salaries.
However, the internet opens up a wide range of possibilities, including content creation and online businesses.
Ideally, one of the parents will stay home with the children. I can tell you from experience that the world is making it difficult to navigate with both parents at work. Here are some examples of conflicting time schedules:
- appointments
- children getting sent home (sick)
- after-school activities
- early school days
- bus schedules
- parent/teacher meetings
- Sports travel
Making money from home. The stay home parent can make a good living with an online, local, or automated business like vending machines.
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You will have to think outside the box, though. You cannot wake up and start making money online. Hopefully, you all started preparing for a parent to stay home early in your relationship.
It takes 4-6 years to make good money online, so prepare for this timeline. I recommend something that you can do in the middle of the night.
Yes, it will be tough for everyone involved, but getting this income stream off the ground is vital to saving for a house down payment. Once you put in the challenging 4-6 years, your online business will become much more passive. A blog is an excellent example of this dynamic.
Which type of home to buy first? You can afford a big house if you live in a small city and have a significant income. But is the route to go first?
How big is your current family, and do you intend to expand it over time? If you can stay in a home for 20 years, you can afford to go big. But if you plan to move in 5-7 years, buying a starter home is ideal.
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Getting your first home is the most challenging part of wealth-building. Once you own a property, the housing market grows your wealth via price appreciation.
We only need to be good stewards of our housing resources and perhaps leverage home equity to invest in other businesses, dividends, or more real estate.
Living in a small city may afford us opportunities to use the land to add mobile homes, storage containers, or RV lots for additional passive income.
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The best part of living in a small city is that our mundane lifestyle allows us to save and invest. There is much less competition between parents and fellow employees.
Conclusion. It will be tough to buy a home in a small city, even with a nice income. The problem comes from outsiders bringing in big cash to your town.
Not only do you have regular people cashing out from big cities, but you also have investors coming to your town. Investors have a better chance of building wealth in small cities than in larger ones.
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Understand your town’s situation, and make an intelligent move. You’ll have to think like an investor to get ahead, even in a small city.
This may mean buying an empty lot, adding a mobile home, and then building your dream home 4-6 years later while keeping the mobile home as a rental.
Do not take anything for granted. Prices in small towns can accelerate quickly as people move from coastal towns with big money in hand.
Start your online business the day you get married and have a plan for your childcare early. If you decide to homeschool, start reading books today. Life is good in a small town but requires a big mindset. Good Luck!
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