4 Simple Ways to Save For a Down Payment on a Home
At some point in our life-time, we will aspire to own our own homes. However, the down-payment of a house can be anywhere between 5% to 20% of the cost of the house– and in most cases, 20%. This is a big chunk of change that many of us don’t have, and one of the biggest reasons why many people opt to rent instead. That being said, the possibility of buying your home isn’t impossible. Consider the following simple cash-saving tips to help your dream of owning a home become a reality.
Skip your morning coffee run.
Mornings always become instantly more enjoyable after your daily trip to the coffee shop. While spending $5-$7 on a latte and a muffin every morning may not seem like that much money, it really ads up after a month– or a year. Try to make coffee at home or at the office, and pack your breakfast. It may not be as glamorous or tasty, but breaking this daily habit can save you up to $1,500 a year.
Automate your savings.
Set aside a fixed amount every month and don’t waiver from it. It can be as big as $300 a paycheck, or as small as $20 a week. If you stick to this savings plan, you’ll have a nice pile of cash in no time. Be sure to bring your collection to the bank every few weeks so that you don’t have too much cash lying around, making you vulnerable to theft.
Put aside tax refunds and other gifts.
After getting your tax return, it’s tempting to go spend the extra money on that a luxury item like that new kitchen gadget you’ve been eyeing. Instead of letting the money burn a hole in your pocket, put it away in a savings account. The same goes for cash gifts from birthdays, anniversaries, or holidays. While saving this extra money won’t feel as fun as spending it, you’ll thank yourself down the line.
Take on a side gig.
Even if you work full time, chances are you can give up some of your down time to a second part-time job. This side-gig can be an independent business or freelance position like blogging or tutoring. If taking on another job seems overwhelming, keep in mind that this isn’t permanent; it’s just for a small period of time so that you have some extra cash flow. Don’t forget to put the extra money you earn straight into savings so you’re not tempted to spend it.
Once you start saving some money and getting into your new routine, seek the advice of a financial advisor to find out what kind of home you’ll be able to afford, and how long it will take you to be ready. Don’t be discouraged; if you want to be a homeowner, you’ll get there– it just takes time, patience, and a lot of discipline.
How do you save money when preparing for a large purchase like a down payment? Let us know in the comments below. For information about how to get approval for a mortgage check out Mortgage Approval Requirements.