So, you’re ready to buy a home but don’t know where to start when it comes to saving. You probably have bills now (rent, utilties, car payment, etc.) and now you’re trying to save thousands of dollars for a down payment on a home. How do you do it?
How to Save for a Home
There is no “fast” way to save for a home. When it comes to saving, finding focus and consistency lead to success. So, how do you go about successfully saving for a house? Here’s where you can start:
- Get an idea of the buyer-seller market in your area. Of course, everyone has their idea of a dream home but buying a lower cost home may help you in the long run. After years of adding to the home and any renovations you may have made, your equity will go up and you’ll be more likely to be able to afford a higher priced home in the future.
- Automate your savings. Most banks have an option to automatically deposit cash into your savings account. For instance, if you get paid on the 15th each month and want to put $200 of each check into savings you can set it up to transfer on the 16th. Doing this ensures that you won’t forget to save (or find a reason not to).
- Save every extra penny you can. In addition to automated savings, try to save 100% of all windfalls. This includes bonuses, gift money, and prizes. You may also consider participating in a money challenge to encourage healthy saving habits.
- Don’t lose focus. Saving for a home can be consuming. Don’t lose focus on the other important things in life. For instance, if you are saving for a home it would be counterproductive to skip paying your rent. Although you don’t want to be renting any longer, you still need a place to live. Saving for your home is important but so is maintaining good personal finance practices.
- Budget. Budget. Budget. Create a budget and stick to it. Budgeting will help you realize where you can cut expenses and where you can’t. This will help add to the savings for your home.
- Generate more income. If you want to save more money fast, you may want to consider looking for ways to make more money.
10 Ways to Speed Up Saving for a Home
- Ask for a raise. If you’ve been at your job for a while, ask for a raise. Negotiating a raise can be intimidating but remember that your time is worth money. Walk into the negotiation knowing what you’re worth and so will they. Having additional money each check will help you save for your home.
- Get a second job. Maybe you aren’t able to get a raise with your current employer. If that’s the case search for a second job. Consider weekend and part-time positions that won’t add too much to your plate but will help you save.
- Downsize your current living situation. Not everyone is able to do this but you can “generate” more income by downsizing for a short period before buying your home. Many couples move back into their parent’s home when saving to buy their own.
- Have a yard sale. Almost everyone has junk in their house they could get rid of and, chances are, there is someone out there willing to buy it and add it to the junk at their home. Hold a yard sale to generate some extra cash to add to savings.
- Make money with surveys online. There are survey sites that pay fairly well. You can make extra cash to stash away using the various survey websites out there. Make sure you get signed up with one that actually pays out though.
- Trim your budget. If you’ve taken the advice above, you have a budget. Are there any places you can cut down? Groceries are always my first go-to when I’m looking to trim my budget.
- Sell blood or plasma. There are parts of your body you can legally sell for money. Blood and plasma are both great ways to make extra cash to put in savings, especially if your blood type is rare. Many places will pay up to $400 for donating plasma, depending on the amount you’re able to give. Most donations equate to about $25 to $50 though. You can donate regularly though so if you want to add this to your list of ways to make extra cash it’s a good one.
- Open a high-yield savings account. Opening a savings account with a higher interest rate may help you save money faster by generating more money in interest than you would normally. However, many high-yield accounts have penalties if/when you withdrawal so before you open an account, read the fine print.
- Freelance. If you’re a writer or know a trade that you can freelance with, do it. Freelancing is a great way to make extra money to save for a home. You generally make your own schedule and only play off your own strengths.
- Talk to a financial advisor. Lastly, if you’re having trouble saving for your home or need more ideas on how to better prepare for your home, contact a financial advisor. They won’t necessarily help you generate more income but they can help you find money you didn’t know you had by sorting your finances.
Getting ready to buy a home is an exciting and stressful time. Wanting to get it over with is natural but, when it comes to saving for a home, there is no fast track. However, take the tips and ideas above into consideration and you’ll be on your way in no time.
Have you saved for a home? How long did it take?