One of the biggest stresses of buying your first home is saving for that down payment. Ideally, you started this process when you were first thinking about moving out of your parent’s house or from your expensive apartment. However, you may be looking for some fast, last-minute ways to save as well! It’s never too soon to learn how to save and cut expenses for your next big purchase!
If you’ve been pre-approved for a new home mortgage, you might have a good idea of how much money you need to save. Plan on having a minimum down payment of at least 5% the total value of the property. You may want to save up to 20%. Knowing this, and how much you currently have saved, set up some goals to get you there. Trying using the SMART Goal method:
- Time Bound
For example, “To save [specific $ amount] by [specific date], we are going to do [insert specific savings tactics].”
Here are seven savings tactics that you may want to consider:
Set Up a Savings Account
Setting up automatic transfers into your savings account each week makes this process a bit less painful. Put all your raises, bonuses, and tax refunds into savings as well.
Remember Every Penny Counts
It may sound old-fashioned, but maybe even get a “change jar” started. Perhaps you can start a competition to see who can save more! Did you know it only takes $1.37/day to get to $500 in a year?
Let Go for Cash
Turn your trash, or at least anything you haven’t used in the past year, into treasure! In addition to traditional for sale and auction sites like Craig’s List and eBay, there are a number of new websites and apps that make it as easy as snapping a picture. Check out LetGo, Close5, and OfferUp to see which one is the most popular in your area.
For most of us, it’s not just about saving… we also need to cut expenses.
Break Bad Habits
When you audit your bank account, you can start to see where you can break your bad habits. This could be very eye-opening! Where are you currently spending your money? Do you have an expensive latte habit? Add up how much you can save just by cutting back a bit.
Remove Subscription Services
Do you have monthly subscriptions or memberships? For example, do you have Pandora, Apple Music and Spotify; Netflix, Amazon Video, and Hulu? Try picking one to pay for and keep the free versions for the rest. Do you belong to a gym that you no longer use? If you’re not ready to give up a specific membership, you can usually downgrade or put your memberships on hold without any penalty.
Have fun with the process! Saving for a down payment doesn’t always have to feel like a chore!
Have Fun in The Pantry
Try See how much you can use in your pantry! Challenge family members to create dishes with items from the pantry. If you have to go to the grocery story, remove the opportunity for impulse busy, don’t go hungry and be sure to have a list of what you need.
National Restaurant Association shows family with kids younger than age 6 spends an average of $239 each month. How long can you go without eating out? Try creating theme nights at your house to keep dinner in fun.
Use All Those Gift Cards
If you’re like most Americans, you have some unused gift cards lying around. Get them together and plan some interesting outings. Free coffee? Spa day? Date night? You’ll probably be surprised at what you have stashed away. Who says saving money for a down payment isn’t fun?!