Saving tips for your own house

Hi,
my boyfriend and I (both 26) have finished our studies (both Master's) about a year ago. Currently, we have a household net income of about €3,500; soon I will start a new job and our income will increase to about €4,000 net. Our apartment in Hamburg costs about €900 per month with all expenses included. We have now talked a lot and intensively about the fact that we would like to buy a house and now want to save for it. Of course not immediately, but in a few years it should happen. We haven't really "saved" yet, we have only saved about €3,000 so far. Now my question is – how do we best start? Is a building savings contract [Bausparvertrag] useful, or is it better to have a separate online savings account [Tagesgeldkonto] where we save? We could put aside at least €1,000 monthly for the house – we are also saving for vacations etc. on the side. Do you have any tips? We are also still very unsure whether to buy a house or build a new one – so if anyone has advice, please share. Oh, and of course we know how the house prices in Hamburg are, we don't want to stay in the city – cheaper surrounding areas are completely fine for us.

Best regards
Lisa

First of all, congratulations on what I consider a very adequate income at this stage of life. Briefly now a few notes so that you don’t lose sight of the overall picture:

1). Pay off debts, if any (BAföG ...)
2). Build up reserves for unforeseen emergencies (guideline: 2 to 3 net salaries in a daily allowance account)
3.) Protection against risks (illness; liability; occupational disability; ...)
4.) Keep a household budget book
5.) Cost discipline (no consumer loans, no unnecessary insurances, ...).
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| Set goals: Get to know the world? Build a career? Have children?
| Build a house? Drive a 12-cylinder? Plant a tree?
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6.) Plan for retirement provision (stock savings plans; bank savings plans; Riester products, ...)
7.) Save for the house (bank savings plans, if applicable home savings plans, if applicable Riester products, ...)

The order is intentional!

First of all, congratulations on what I consider a very sufficient income at this stage of life.

True, although you can’t rest on that yet. When there are children, an income can quickly be temporarily lost, and afterwards only partially return.

6.) Plan retirement provision (stock savings plans; bank savings plans, Riester products, ...)
7.) Save for the house (bank savings plans, possibly home savings contracts, possibly Riester products, ...)

You can also combine these. First save and pay off the house, then save for retirement. But the original poster is far from that.


How you save is currently pretty irrelevant, as interest rates are low. Whether or not to enter the stock market at current stock valuations is something everyone has to decide for themselves, just like the question of whether to trust any advisors or not. I only trust myself. So far, I have done pretty well that way, and if I ever make a mistake, at least it’s my own fault. In any case, do a lot of research and form your own opinion.

Nice list from Bieber0815!

You can also combine it. First save up and pay off the house, then save for retirement.

I agree. It rarely makes sense to save for something that yields less than the interest you have to pay on the property. And it will hardly happen that savings interest rates become higher than loan interest rates.
But, .... of course it always depends on how you have to finance.

Let's see whether it is more worthwhile to invest in Riester or to increase the repayment.

You can also combine. First save up and pay off the house, then save for retirement. But the TE is far from that.

Yes, indeed. If a house is desired, one should usually pay off the mortgage first (see point 1 of my list) and then build up "free" assets for retirement provision. On the other hand, it can make sense to already pay into a retirement plan parallel to the house financing in order to take advantage of compound interest or to better utilize subsidies (only amount X is tax-advantaged, so it’s better to pay amount X over many years rather than a larger amount Y over a few years…). For buying a house, I would save with very simple means (overnight money, bank savings plans, fixed deposit/savings bonds, savings bond ladder). Stock savings plans are something for retirement provision, where in this case a term of about 40 years is given. In the long term, stocks have always been the best choice in the past. But even then, one should always pay attention to the costs.