Saving for a down payment is often the toughest task for home buyers, especially after battling COVID-19 hurdles the last few months. Whether you’re opting for an FHA loan with as low as 3.5 percent down, or shooting for a conventional loan with 20 percent down, saving money in general can be difficult to accomplish, especially when you’re juggling all of life’s expenses. So whether your goal is $4,000 or $40,000, consider these 5 simple ways to save for a down payment.
Create a budget
The first thing to do when attempting to save for a down payment is to evaluate your current financial situation. It’s hard to save money if you don’t have a grasp on how much you’re currently spending/saving. Go through your bank statement and figure out where a majority of your money goes. If you are spending a significant majority of your income on rent, it may be wise to consider moving to a less expensive place while you’re trying to save. If you’re spending a significant portion of your income on food, consider meal prepping and cooking at home. Everyone’s spending habits are different, which is why it’s important to understand yours before you make a plan to save.
A lot of us don’t really know what we’re subscribed to anymore. $10 here, $40 there, it all adds up month after month. Go through all of your subscriptions and cancel all the programs you haven’t used in a while. Additionally, if you are subscribed to two or three of the same kind of programs (i.e., music, TV streaming), it’s best to choose your favorite one and cancel the rest. Just canceling $30 a month on subscriptions can help you save $360 a year.
Cook from home
Cooking from home is one of the best ways to save for a down payment as it can save you hundreds of dollars a week. On the weekend, go to the grocery store and plan out what meals you want to make for that week. If you don’t have a ton of time during the week to actually cook, you can also meal prep a few meals on Sunday and store your food in easy to heat containers. And if you’re someone who loves to go out to eat, start small. Instead of going out 7 days a week, consider only going out 4 days a week and cooking for the other 3. Just starting to cook your own food will save you so much money month over month. Additionally, buying a coffee every morning can really add up. If you don’t have one already, consider buying a coffee pot so you can make your own coffee. This will also save you hundreds of dollars per month.
Pick up part-time work
Part-time work is one of the best ways to save for a down payment. If you have time on the weekends, consider picking up part-time work to supplement your income. The earnings from your side job can go directly toward your down payment. By freelancing in your field outside of work, or driving for ride share programs, you may be surprised how much you can boost your earnings with a few hours of part-time work each week.
Keep track of your progress
To realistically reach your down payment goal in your desired time frame, it’s important to track your progress. Every week, track how much you’ve spent and how much you’ve saved. If there are weeks where you overspend, finds ways in future weeks to cut back your spending. By holding yourself accountable, you’ll see progress toward your goal in saving for a down payment.
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