Everyone daydreams of buying their own place, but with the rising cost of homeownership, saving up enough money for a down payment on even a small place can seem like an impossible task.
But with careful planning and a little creativity, you can have enough money saved for a down payment sooner than you ever expected.
Separate Bank Account
Open a separate bank account and only put money in it for your down payment. Don’t touch the money in that account until you’re ready to buy your home. Having a separate account will help you keep track of your savings, and watching the balance grow will help you stay motivated to put every spare dollar toward your down payment.
Brown Bags and Travel Mugs
It’s easy to spend $20 a day on coffee and lunch if you eat out during the workweek. By brown-bagging your lunch and using a travel mug to bring home brew coffee, that $20 per week will contribute more than a thousand dollars to your new home fund in a year.
Netflix, Newspapers, and Other Subscriptions
Do you have a slew of magazine subscriptions collecting dust on your coffee table? If you’re saving for a down payment, it’s time to cancel these subscriptions. Canceling your cable and opting to watch television shows or movies over the internet can also save you a small fortune.
Did you get a holiday bonus from work that you weren’t expecting? Or maybe win a few hundred dollars the last time you played bingo? Or a lucky lotto ticket?
Deposit any unexpected money into your bank account. And if you’re lucky enough to come into a sizeable windfall, such as an inheritance, consider investing your funds into a short-term, high-interest account for additional earnings, all going towards your new home.
Family and Friends
If you find yourself close to the required amount, but still just a little short, consider checking in with family and friends who may be able to help with a short-term, low- or no-interest loan. Pay them off first, and be sure to invite them to see the house before anyone else.
Reduce Retirement Contributions Temporarily
For a short period, reducing your retirement contributions can help you save for your down payment. Contribute less to your retirement only for the duration that you’re actively saving. Once you have the down payment covered, don’t forget to increase your retirement contributions once again!
eBay, Etsy, and Kijiji, Oh My!
Saving for a down payment means you’ll have a move in your future. And that’s an ideal opportunity to evaluate your possessions and declutter. Haven’t used that sewing machine in years? Have a treadmill you always meant to unpack but never got around to setting up? Sell them online and add money to your growing bank account.
Consider Working a Second Job
If you’re able, taking on a second, a part-time job can help you increase your savings for a down payment. Look for ways to earn money for something you already do, from a hobby or pastime. For example, do you love walking your dog? Could you walk a second dog at the same time? If so, you could add another $15 – $20 per hour just by walking around your neighborhood with your pup and a canine companion.
Do you get money from family or friends when your birthday or the holidays come around? These little gifts can give your savings account a fantastic boost. Send a thank-you note and let your family or friends know that you’ve put the money toward your new home.
Deposit Your Tax Refund
Getting a tax refund always seems to feel like you’re getting free money, and you may be tempted to spend it on a vacation or other nice, but unnecessary, treat. But regardless of whether or not your tax return is thousands of dollars or just a few hundred, put it toward your dream of owning a home.
It may take you a couple of years to save up enough money for your down payment, but by following these tips, you’ll be surprised how easy it is.