Buying a home is a huge investment, and that means you will need some money to get started. Down payments can be 10s of thousands of dollars, so if you don’t have that, you’ll need to start saving up. There are also things like closing costs to consider. To determine how much you need to save, consult with a mortgage professional. You may qualify for down payment assistance or programs that don’t require as much savings to buy a home.
Saving money can be easy if you know what to do and how to do it! These are 5 simple ways to save up money for a home.
1: Focus On Your Priorities
Focus on things you need to pay for first, like rent and credit card debt. This will let you improve your debt-to-income ratio, which will help you when buying a home with a mortgage.
Paying down credit card debt is an important part of overall financial well-being and can improve your credit score, so it might make sense to start there. Plus, it’s much easier to save money once you’re not chained to high-interest debt payments.
2: Automate Savings
Determine how much you can cut out of your lifestyle expenses to save money towards your goal of homeownership. Once you’ve figured how much to save per month, automatically transfer that amount into a savings account every month.
3: Make Extra Cash
If you have free time, you might want to use it to make money. Bringing in extra cash is a great way to put more money into savings. Sell some of your unneeded items online or in a garage sale. A part-time job might also be a viable option, or even work up the courage to ask for a promotion at your current one.
4: Check Your Spending
Before you buy something, think about whether or not you truly NEED it, then check whether there is a cheaper option that you can go for instead. Cut back your grocery bill, clothing expenses, and entertainment budget.
Are you spending money on extra things you don’t need? For instance, maybe you’re paying for multiple streaming services. Cut back on these extras. Keep your eye on the prize.🏠
Using cash also reduces spending. Take out a set amount of cash for that month’s budget. This will help you visually see how much money you have to spend.
5: Reduce Bills
Take a close look at your bills, and find ways to reduce them. Can you refinance your car or student loans to get a better payment? Or, you may be able to renegotiate your cell phone bill or car insurance. It doesn’t hurt to try, and every little bit helps you towards your goal.
Utility bills are usually the easiest to reduce. Maybe take a shower instead of a bath, take shorter showers, skip the dryer, wash your clothes with cold water, set your thermostat closer to the outside temperature as much as possible, and turn your water heater down a bit. Small tips like these can add up to save a lot of money every month on utility bills.
BONUS: Put Extra Cash Towards Your Goal
If you get a bonus at the end of the year, a tax refund, or even cash for birthdays and holidays, put that money towards your goal of homeownership. Large infusions of money into your savings can really help you gain traction towards your goal.