Making the jump from home renter to home buyer is a major step, but with a few lifestyle changes, saving up enough for a down payment on a home can come faster than you think. The key thing to remember when saving up for a home is that the lifestyle changes you make will only be temporary, and they will prove well worth your time and effort when it comes time to finally make that down payment. Here is a look at 5 simple ways to save for a down payment on a home.
Create a targeted savings account.
Your efforts in saving up for a new home will go much further if you channel a portion of your earnings into a savings account designated for down payment savings. Opening up a special account for this purpose only will make your goal much more focused, and you’ll be much less likely to dip into savings on a whim. Moreover, this can serve as a place for you to set aside all unexpected sources of income—tax returns, bonus checks, birthday money, garage sale earnings, etc.
Reduce your rent.
If you’re saving up to buy your first home, then rent is most likely your primary expense at the moment. It makes sense, then, to target rent first. If you’re a good tenant, you might be able to negotiate with your current landlord about paying slightly less for your rent every month. When this isn’t an option, be sure to take advantage of any referral specials that your landlord might have going on. Beyond this, even if your living accommodations are well within your budget, you may want to consider temporarily relocating to something even more affordable, or taking in a renter—you’ll see the savings come much faster this way. The key thing to remember here is this: keeping your housing expenses below the recommended 33% mark every month might be working well for you now, but getting those expenses down to, say, 20% is what will really help you bring in that down payment money within the span of just a few years.
Find an additional source of income.
Consider putting in extra hours at your current job if you happen to get paid for overtime, and when that isn’t an option, consider taking up an extra part-time job. You could even start a small business on the side. Just be sure to channel all of this extra income into your down payment savings. It may require some sacrifice in the short term, but making your goal of owning a home a reality will make your efforts well worth it.
Sell high-priced items.
You’d be surprised at what higher priced items you own but do not use frequently enough to justify keeping. Do you live near public transportation but still use your new car to commute to work every day? Consider selling your car, or trading it in for something cheaper to recuperate the difference. Do you watch more and more TV on your computer these days? Maybe it’s time to sell your TV. From electronics to high-end kitchen appliances, you’re sure to find something that can add a significant chunk to your savings fund.
Nix unnecessary expenditures.
If you take a good, hard look at what you’re spending money on every month, you’ll likely find expenses that it no longer makes sense for you to keep up with now that you’re saving. Examples of such expenses include clothing, specialty coffee, gym memberships, online media streaming subscriptions, gas, and dining out often.