Saving for a down payment is one of the most exciting, important financial moves you’ll ever make. It can also be scary and intimidating to imagine how you’re going to be able to save the recommended 20% down. But never fear! There are many ways to save for a down payment that are easier than you think — and some you might never have even considered. Here are five easy ways to save for a down payment on a home:
Cut Out All Non-Essential Spending — Any unplanned purchase of $30 or more is considered an impulse buy. If you have even a few of those a week, they can really add up! Now is not the time to be picking up the happy hour tab for your crew or splurging on a new cell phone. Plan a budget that covers the essentials and your bills, and save everything that’s left over toward your down payment.
Find Cheap or Free Alternatives — When you’re saving to buy a home, every penny counts. Take a hard look at where your money is going and see where you can cut back. Instead of cable or satellite, opt for a basic Netflix or Hulu package. Nix the gym or Soul Cycle membership and work out to online fitness videos at home. Skip the daily Starbucks run and make your own coffee; same with bottled water — use a glass or stainless bottle and fill it with filtered tap water. You’ll be amazed at how much you’re spending on so-called necessities and how much quickly your down payment fund will grow when you funnel that money into it.
Make Gifts Count — If you feel comfortable doing so, tell family and friends that you are in the process of saving for a down payment and that instead of birthday or holiday gifts, you would love for them to contribute to your savings. If the direct appeal isn’t your style, you can still make gifts count toward your goal. Let people know you’d like ‘practical’ gifts cards good for things such as gas and groceries. When you use the gift cards to pay for those items, place the equivalent amount of cash into your down payment fund.
Save All Found Money — Put every penny of overtime pay, bonuses, tax refunds, and pay increases into your down payment fund. It’s always tempting to spend found money, but the rewards of a spending spree will be fleeting, while the ultimate reward of saving for home ownership can be life-changing.
Find Ways to Earn Extra Money — Whether it’s a matter of holding a yard sale, selling your extra stuff online, freelancing, or getting a part-time job, look for every opportunity to bring in extra cash. There’s no such thing as working too hard when owning a home is your goal. Plus, the more time you spend working, the less time you’ll have to be tempted to spend your hard-earned cash.