A house is probably the most expensive thing you’ll ever buy. Many people refer to…
Wondering how to save up for a down payment on a house? After all, it may take you a period of time and some sacrifices to save up the money you will need. Here are some of the best tips we’ve found to make it as painless as possible.
Save for a Down Payment by Slashing Expenses
The first thing we recommend is looking at where your money goes. How much money do you spend eating takeout every week? How much are you ordering things you “need” from Amazon on a regular basis?
Most of us spend a lot more than we realize on these types of things. Once you identify them, think about how you can cut back without making your life boring and dull. If you go from one extreme to the other, it probably won’t last.
Let’s say right now you get takeout three times a week. Start by dropping that to twice a week. Assuming you were buying for several people, that will probably save you at least $20 a week, or $1,000 a year.
Or maybe you’ve realized you spend a few hundred dollars a month on items for your home. The next time you’re about to check out, take a few things you need the least out of the shopping cart. Instead, transfer the money you would’ve spent on those items into your down payment savings account.
Set Up a Savings Account for a Down Payment
Do you keep all of your savings – emergency, new car, house down payment, etc. – in the same place? Or do you use different accounts for each?
We recommend you try out the latter if you aren’t doing it already. There are a few advantages to having separate savings accounts instead of keeping it all in the same place.
First, separate savings accounts make it easy to see how much you have saved towards different goals. You’ll know the second you hit that down payment goal.
Second, it prevents you from “borrowing” money from your dedicated savings account to pay for something unrelated. So when the car beaks and needs repairs, you won’t be pulling money from your down payment. Instead, it’s money coming from your separate emergency or car fund.
Third, you can hide it. Since you’re trying to save a big chunk of change for your down payment, consider opening up an account with a new bank for just this one account. That way you won’t see it every time you log into your normal bank. What you don’t see, you don’t spend!
Save for a Down Payment by Earning More Money
Do you have a side hustle? If not, consider starting one up. If you do, try spending a bit more time on it every week to earn extra cash. The extra income from a side hustle is a great way to reach your goal faster.
A lot of people moonlight these days. You can be a freelance writer, make jewelry to sell on Etsy, watch people’s dogs, or something else that brings you joy – and an extra income.
Saving up for a down payment isn’t easy, but you can do! If you wold like more personalized advice and tips, send us an email at firstname.lastname@example.org. We’ll help you get on the path to your dream home in no time.