Buying a home is a big financial decision. Even though you will save money in the long run by switching from renting to homeownership, you will still be required to put down a sizeable down payment. With some pre-planning and some changes to your spending habits, you can save for this down payment in a year’s time. Here are few tips to help you save up for that down payment.
1) Cut Down on Spending
The first step is to trim the fat and cut out excess spending. This means eating at home more, traveling less and being more mindful of what you are buying. Look at your budget closely to see where you can cut spending. Every little bit helps. Eating out can cost $40-$100 a meal. When you are planning to travel or go out, remember your goal of spending less and remember if you don’t need it, don’t spend money on it.
2) Work a Side Gig
It is a sacrifice to work more, but a part-time job can be a huge supplemental income. Put the cash you earn from this side gig directly into your savings. Even working a $15/hour job for 15 hours a week can bring in an extra $900 a month before taxes. This extra paycheck can get you that much closer to saving for your down payment in just 12 months. If you can’t take on a second job, consider asking for a raise or looking for a job that offers higher pay or bonuses. Working overtime at your job is also a possibility that could end up bringing in the same amount as a part-time job.
Downsizing your current space can help you save costs. If you are renting, consider moving to a smaller space with a less expensive rent. Downsizing could help save you a few hundred bucks a month. If you can’t downsize, you could also consider moving in with family. Take advantage of any low-cost living opportunities you are presented with.
4) Save Windfalls
Save all of your bonuses, tax returns, gifts, commission checks or profit off selling any personal assets or possessions you can go without. One-time cash infusions can help you reach your savings goal quicker and if you are on a budget, you won’t need it anyway, so put all of the extra cash you receive straight into your savings account.
5) Downgrade or Drop Services
Try to cut out certain services like cable. The average cable bill is $100 a month, but streaming services like Netflix and Hulu are less than $10 a month. Check with your cell phone provider to see if there are other affordable options if you don’t want to cut out cable altogether. You should also contact your insurance agent to reduce insurance coverage to lower the cost of your monthly premiums.
Other things you can cut are things like gym memberships or subscription services. You can always sign up for these again once you have saved enough for your down payment.
Every penny counts! Once you are ready to begin your home search, give my team a call! We’d love to hear from you.
I wish you well and invite you to contact me if you have questions.
Please stay healthy and we hope to hear from you soon to discuss your property search and status.
Until Next Time!