If you’ve given thought to buying a home in the near future, then one of the first hurdles you’ll have to jump is saving for a down payment. Even though getting pre-approved for a mortgage is important, having 20% of the cost of the home ready in advance will save you money in the long run. And since we’re currently in a seller’s market, being prepared to move quickly on homeownership is a must if you want to snag your dream home before another buyer swoops in and steals it from you.
Below are some tips on how to save for a down payment without stressing yourself out.
Start Now
Unless you downsize your living situation, your monthly living expenses aren’t going to get any cheaper. Start your saving plan now so that you can adjust for living expenses moving forward.
Create a Clear Plan
A savings plan will help you identify how much you need to save. It will also help you determine areas where you can cut back. Start by setting a downpayment goal, then break that amount down over a period of time that makes sense for your situation. (Tip: be realistic in setting this timeframe. It increases your chances of success.)
Once you have an amount and a period of time to obtain it, then you can drill down how much you need to save per month in order to reach your goal. For example, if you want to save $30,000 over the course of 24 months, then you’ll need to save $1,250 a month to reach your goal.
Pull Back Your Spending Habits
Now that you know how much you need to save each month, it’s time to have a heart-to-heart with your spending habits to see where you can cut corners. You may be surprised to see how much you’ve been spending on monthly streaming subscriptions, gym memberships, and takeout. Calculate how much you would save by eliminating these expenses and put that money into a savings account.
Consider a Side Hustle
If you have spare time and want to make some extra money, consider getting a side job to bring in extra income. Let family and friends know that you’re available to housesit, babysit, or pet sit. Drive for Uber, Lyft, or Doordash.
Sell Some of Your Stuff
Chances are, you’ve accumulated a lot of things over the years. Take inventory of your belongings and put some of your extras up for sale.
Set Bonuses and Raises Aside
Instead of increasing your spending habits when you get extra money, put that money into a savings account and continue living your life as if you never received it.
Are you ready to start shopping for your next home? I work with buyers across all price points and will help you find the best house for your lifestyle and budget.
