If you want to purchase a home, it’s always a good idea to save up at least 20%. Saving up 20% has immense advantages in terms of reducing your mortgage rates and helping you pay off your home faster. Here are our tips about how to save for a down payment:
Stop the Small Purchases.
If you’re saving up for a down payment, it’s in your best interest to stop making small, unnecessary purchases. Some examples of this would be to pack your lunch instead of buying it or making coffee at home instead of going to a coffee shop. Though these purchases are small, they add up over the years, especially if both you and your spouse are making them.
Downsize Your Housing Situation.
If you are trying to save for a down payment, one great way to do this is to downsize your housing situation. Some ways to do this would be to move back in with your parents, move to a smaller apartment, or live with a roommate.
Dedicate One Person’s Income to the Down Payment.
If you can afford to do so, it would be great to set aside you or your spouse’s income for the down payment. This will teach you to budget and will allow you to save up for the down payment much quicker than if you were trying to ration both salaries.
Set Automatic Payments.
Many banks have an online option to make set transfers to a certain bank account every month. If you set up this option, it would be much easier to save as you won’t have to think about it every month.
Start Making a Side Income.
If you have a hobby that you are passionate about, see if you can turn it into a moneymaking venture. For example, if you like playing guitar, see if you can book a few paying gigs at local coffee shops. The extra income will go a long way in adding to your savings, and it will be a fun way to do so.