How to Save for a Down Payment
Photo by Karolina Grabowska from Pexels
Trying to save money for a down payment on your next home can be tough. Here are some quick, simple tips that go a long way.
Make Savings Automatic
With entire books written around this one topic, this is one of the best things you can do. The idea is that if you never see the money hit your checking account, you won't spend it.
There are two ways you can do this:
- Set up direct deposit at your employer to automatically put a percentage of your income into your savings account.
- Have the money hit your checking account, then automatically get transferred on certain days of the month into savings.
Don't start with a big amount. Start small and work your way up.
Stop Eating Takeout as Often
Most Americans grab takeout or fast food a few days a week. Try making your own food at home and putting the money you save towards a down payment.
The key here is to scale back slowly. If you eat out five times a week right now, try doing it just four times. Then once you're used to that, scale down to three.
Already down to just 2-3 times per week? Then drop it to 1-2 times. The key is to find the right balance for you. Some people only eat at restaurants a few times a year – others do it a few times a week. Neither is right or wrong.
Earn More Money
Do you have a job that has the potential to let you work extra hours for more money? Maybe you work in sales and get a commission. Or you have an hourly job and can put in extra time.
The key to this is to make sure the extra money you earn goes towards this goal. Don't spend it on a new toy or vacation. Determine how much extra you earned and throw that money into your down payment savings account.
Stop Buying Stuff for Your House
Let's face it – online shopping is dangerous. It's so easy (and tempting) to just hop online and order stuff, knowing we can have it in a few days without even having to leave the house.
If you constantly have boxes from Amazon or other e-commerce sites hitting your doorstep, consider taking a break for a while. You may not really need a lot of that stuff, and it just adds to your list of things to pack and move when you buy your home.
Instead, commit to only buying things you need for the house. That will let you keep more money in your pocket instead of going into Amazon's.
Scale Back on Holiday Shopping
It's that time of year. Amazon's Prime Day was about a month ago, and Black Friday is coming up. Every company in the US is gearing up to have sales.
Take advantage of these sales and get your holiday shopping done. Consider spending less money on people this year so you can have more money available for your down payment.
It doesn't mean you need to scale way back. But don't feel like you need to spend lots of money just because other family members do.
Do you have any questions about how to save for a down payment or any part of the home buying process? Send us an email at info@bydand.com – we look forward to hearing from you.