7 Tips for Saving for Your New Home Downpayment
Your home is probably the biggest investment you will make in a lifetime, and it will probably require the biggest up-front financial contribution. You’ll most likely need at least three percent (and sometimes up to twenty percent) of the home’s selling price in order to get into a home. That puts you with a burden of having to save, literally, thousands of dollars for your home’s down payment. We all know that, economically speaking, times are tight. So how do you go about saving thousands of dollars when it’s hard enough just maintaining a living? Here are seven tips for saving for your new home downpayment:
Second job. You don’t have to work two full time jobs, but taking a part-time, evening or weekend job can greatly contribute to you down payment savings. Just think of it this way: the income from your primary job must be divided up to pay your monthly expenses, but all of your income from a second job can go straight to your savings. That means that even a small part-time job, working ten hours a week, can increase your monthly savings by several hundred dollars.
Budget. Making a budget allows you to compare your income to your expenses, so that you can see exactly how much you can afford (or can’t afford) to put towards your savings. Also, it is important that you get all of your monthly expenses down on paper – right in front of your eyes – so that you can see where you can trim some fat. Be sure to list every one of your expenses, leaving nothing out, so that you can decide what you might be able to get rid of.
Debt. Pay off those high interest credit cards, as soon as possible. Sure, this might mean you have less to put into savings, in the beginning, but when you consider how much money you will be saving on interest and fees over the long run (and how much extra money you will be able to put into savings as a result), the temporary budget squeeze is worth it.
Investing. If you don’t have your down payment savings in an interest-bearing account of some sort, then put it in one, and the sooner the better. Sit down with a financial planner and ask about the investment options you have to choose from, then place your money in something safe, so that it works for you as hard as you have worked for it.
Small expenses. Consider all of the small expenses that you incur each month – vending machine snacks, lottery tickets, ATM fees, convenience store coffee, sodas, etc. – and then consider doing away with those expenses. If you need convincing, then try writing down exactly what you spend each month on things that you think are “no big deal” and add them up.
Eating out. A great way to really save on money spending is to stop eating out. That means no fast food, no takeout, and no pizza delivery. Okay, you can splurge every once in a while (balance is important, after all), but just remember that every ten or twenty bucks you spend on food, when you could be cooking at home, is money that is not going toward your dream of home ownership.
Transportation. Save big on gas money by carpooling or taking public transportation whenever possible.
Saving a down payment for your new home may seem like an insurmountable prospect, but it’s actually more manageable than you think. It requires some commitment, hard work, and patience, but your investment will pay off, and tips like these will help you get there.
About the Author: Dona Collins is a freelance professional who works as both a writer and an IT specialist. She uses IT staffing services and online sites to find extra work in order to save up for the down payment on her very first home.