Saving money for a down payment to buy your home can be a daunting task. It is best to not only save enough for your 20% down payment but also all closing, moving, homeowners insurance, and a budget for repairs/improvements be accounted for. Which can make saving seem even more daunting. Fortunately there are calculators online that can help you determine how much you need to save back based on your intended home budget.
We are going to look at a few tips and tricks for saving money today. The goal of this list is to be manageable steps towards saving the money you need to make owning your own home a reality. There are thousands of different ways to save money back and how you go about it will be dependant on your situation. However, these ideas will hopefully give you a good place to start.
- Set aside a savings account just for this purpose.- Do your research, find the best savings account you can and start an account purely for buying your own home and all the expenses that will go along with that. This account is just for your home and nothing else, unless a major emergency arises.
- Make a household budget and stick to it. – In this budget try to include every little expense you can think of, including savings. Even large but anticipated expenses should be slotted in, and even some budget for the unexpected. You don’t want to be put in the situation of having just signed on a house, spent every available penny and have something like your car break down! This happened to us, fortunately we had money set aside for the unexpected.
- Track your spending and expenses. – Using your previously made budget to help guide you. Though, with time you will undoubtedly find ways to fine tune your budget and even save more money back. If you need, add in a few “rewards” to your budget so you do not feel too deprived.
- Find creative ways to save money. – Spend a bit more time shopping for better prices, consider buying used items from yard sales, or skipping unnecessary purchases. Or even using items in unexpected ways to save money. There are also options for couponing, working extra, and making a game of saving as much as possible.
- Earn extra income. – Another excellent place to get creative! Babysit, mow lawns, pick up extra shifts, have yard sales, wash cars, or complete “honey-do” lists for others. Whatever it is that you excel at, do it for a bit of extra cash on the side.
- Be debt free. – Prioritize paying off debt that carries a high interest rate. The sooner this debt is out of the way, the sooner you can save that monthly expense towards your home.
Some additional tips to go along with the above:
- Be realistic when you set your budget for a home. Use calculators online to help you account for things properly so you do not overreach.
- Have extra money stashed back just in case. Do not use every last penny for your down payment, closing costs, etc. Surprises happen in life, don’t let a bad one cost you your hard earned home.
- Use online tools and calculators to determine and save back as needed. Using these tools to set realistic goals is a very good idea. Including to account for emergency situations, new appliances, closing costs, and all the other little surprises life can throw our way.
Congratulations on taking the first steps towards owning your own home. Or perhaps your dream home? Keep with and be patient! It will be worth it in the end.