Saving enough for a down payment can seem like a daunting task — so much so that many people put it off and continue to rent. But purchasing a home can be one of your smartest investments, and taking the time to save definitely pays off! Sometimes the hardest part is simply taking the first step. Check out these easy ways to start building your savings.
Smart Ways to Save
- Use a separate account. When saving for a purchase as large as a home, it’s imperative to keep that money separate. Storing it in your everyday checking account makes it too easy to pull a little out here and spend a little there. Depending on how much is in your account, try a separate savings or money market account.
- Create a budget. Most people hate the sound of being on a budget – you could call it a spending plan if it sounds better to you! Regardless of what you name it, you need a plan for your money — every penny when you’re saving for a home. Sit down with a financial planner or try an app or site that’s user friendly. You’ll need to examine money going out each month against the money coming in. Work hard to identify things you can cut to create more available cash to save.
- Make it automatic. I love the saying “out of sight, out of mind” when it comes to saving. Set up an automatic transfer to stow away cash without having to think about it. Check with your payroll department. You can adjust your direct deposit forms to stash a certain amount in savings each payday, or set up an automatic transfer through your bank twice a month. The more automated your savings plan is, the less time and effort you have to put into it. You can sit back and watch your nest egg grow!
- Think outside the box. Technology is amazing, and nowadays you can tap into this technology to benefit your savings account! Try an app like Qapital. You link them to your bank account and each time you make a purchase, Qapital rounds it up to the nearest dollar or two dollars, depositing the difference in your account. You won’t miss the extra change, and you’ll see your savings quickly adding up.
- Save your windfalls. It can be hard not to run out and purchase a new computer or splurge on a vacation when you receive extra money. When you’re saving for a down payment, though, you need to resist. Tuck away those tax refunds and bonuses to give your savings an extra boost.
- Go small to live big. If you’re able, consider temporarily downsizing to allow you to save money. If you can cut your rent by $200 a month or live with a family member short term, you can tuck away a good deal of extra cash.
- Use a home registry. If you have a birthday, graduation or wedding coming up, consider using a home registry. Pass on the blenders and dishes and ask friends and family members for contributions to your down payment. Check out Hatch My House to see what they are all about.
Get creative with your savings and you’ll reach your goal before you know it. When you’re ready to start your home search, I’m here to help. Contact me for help with every step of your home buying experience.