The idea of buying your dream home might seem more like a wishful fantasy if you have no clue how you will stash away enough money to make it a reality. If you are worried about saving up enough to buy a home, you aren’t alone. Coming up with the money for a down payment is one of the most intimidating—and scary—factors for people who hope to become homeowners. The good news: there are some great strategies to help you save for a house.
Saving for a house means taking control of your finances.
Track your spending and expenses.
This is the something you should be doing anyway. Use an app or online tool that tracks your spending and keeps a running total of the amounts you spend on specific items or categories. Tip: it’s easier to track spending if you use plastic for everything. Most people find this process quite eye-opening, as it’s easy to lose track of a how much you spend on frivolous purchases or small items throughout the week. But spending even a few dollars at a time on luxuries or convenience items can really add up. Finding out where your money goes is the first step in figuring out how to keep more of it in the bank.
Make a budget—and stick to it.
Once you evaluate your spending, you will likely spot places where you can cut back or eliminate extras. This may be challenging—sticking to a strict budget often isn’t a lot of fun. But just keep focusing on your end goal. Some belt-tightening now is a minor sacrifice that will quickly be forgotten when you are getting the keys to your new home. If you suspect you will feel really deprived or get discouraged, work a few small yet rewarding “splurges” into your budget to keep your spirits up—but see if you can cancel out the costs of these small treats by saving an equivalent amount elsewhere in your budget.
Be a deal hunter and savvy consumer.
You’re tracking everyday spending, but don’t overlook those recurring monthly expenses, too. Put those monthly bills under a microscope. There’s a good chance you are paying for services and features you don’t really need. Call your service providers, credit card companies and other businesses you pay every month and see if they can lower your rate or offer you a better deal.
Save for a down payment.
When you are saving up to buy a home, that savings account should be considered untouchable. Barring a major emergency, don’t even toy with the idea of spending any of that money until you are ready to purchase a home. It’s easier to keep an off-limits down payment fund if you set up a separate account dedicated solely to this purpose. Think of this account as being a one-way street: funds should go in, but never come out—at least, not until you are ready to write out that down payment check.
Look for ways to boost your income.
Your budget consists of two parts: money coming in, and money going out. You’ll get the best results if you make improvements on both sides. See if there are opportunities to work extra hours. You may even want to consider a part-time job. Think about skills or talents that you could parlay into freelance income.
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