You may think that buying a house is still out of your realm of possibility. You may even feel a wave of panic just thinking about where to get the money for your down payment.
For many young people, saving up to buy a house is the least of their priorities, especially when you’re still in debt from student loans (and even from simply trying to get by until your next paycheck).
However, there are a few small steps you can take to get a little bit closer to that goal. Depending on your lifestyle, there are various ways to make small changes in your spending habits. Once you feel that you’ve already had a jumpstart in saving up for a house, you’ll see that you’re actively seeking more ways to set aside money for your first home.
Set a Goal Amount and Break It Down Into Less Intimidating Steps
It can be daunting to look at a five-digit number that you have to produce for a down payment on a home. The key is to set realistic short-term goals that will eventually add up. Set aside a small amount from every paycheck, and label these savings specifically as “down payment money.”
Choose a Bank With the Highest Returns
If you're not yet ready to invest your money in stocks, you can start by being smart about where you keep it. If the money you have right now is sitting in the bank, pick one with no ATM fees, high interest on savings accounts, and other perks that you can take advantage of.
Switch to Hobbies That Don't Consume Electricity
If you’re fond of watching television (or keeping it turned on while you do something else), try pulling the plug (literally) on this bad habit. Instead of watching shows on TV, try exploring different electricity-free ways of entertaining yourself, such as reading, playing outdoor sports, or taking long naps! Turning the TV off also means that you don’t get lured by ads into buying things you don’t need!
Schedule Trips to the ATM
Withdraw a set amount of cash per week and stick to it. Divide the money into a fixed budget for each of your weekly expenses, such as food, rent, leisure, etc.
Pay Your Future Self First
Consider your savings as the amount you bill to your future self. With this in mind, make sure to pay yourself FIRST before anything else. You can ask your company's HR department to deposit a specific percentage of your paycheck into your savings account each month.
Wait 30 Days Before Making a Purchase
Sometimes, the urge to buy something you don't need wears off after a few weeks. If you’re eyeing a pair of expensive shoes, don’t buy them just because you have cash at hand. See if you can live without it for another 30 days, and you’ll see that most of the time, you can.
Make Your Coffee
The average American spends $1,100 a year on coffee. You can bring this amount down to less than half if you brew your coffee fresh at home every morning!
Stay Healthy
This is a no-brainer. A healthy body means fewer trips to the doctor and fewer hospital bills. Make exercise a habit (or an electricity-free hobby, like what we talked about earlier!), and eat your vegetables!
Get in on Some Food Hacks
Speaking of vegetables, a cheaper but equally healthy alternative to fresh veggies is frozen ones. If you're on a budget, those cheap, frozen broccolis are still a better option than a $3 burger. Look for easy-to-prepare meals you can store and reheat throughout the week, and by the end of the week, you’ll be surprised at how much money you’ve saved by not eating out!
Invest
Investments don't have to be huge. Some banks even allow you to start investing in the stock market via mutual funds with only $50 per month.
Do-It-Yourself
If there's something you want to buy, do a quick search online to figure out if you can make it yourself. So many people take on DIY projects because it’s fun and can save you a lot of money!
Cancel Your Gym Membership
No, this doesn't mean that you shouldn’t be prioritizing fitness. There are a lot of ways you can exercise without relying on gym equipment, such as running outside and taking advantage of online workouts, which you can do at home.
Kick the Cigarette Habit
Like hitting two birds with one stone, ditching the stick will save you up to $2000 a year, AND keep you healthier in the long run. It's hard to quit, but doesn’t that extra $2000 a year sound amazing?
Spend Moderately at Restaurants
If you do have to eat out, one easy way to not splurge too much is to stick to water. The cost of alcoholic beverages and other flavored drinks is marked up by up to 3 or 5 times at most restaurants, so it's better to just skip them. Desserts are also quite expensive at fine places, so just buy the ice cream at the supermarket and have dessert at home if you can!
Find Generic Alternatives
Ask your doctor if you can switch your brand-name drugs to generic prescription drugs. If yes, you may save a couple of hundred dollars on your annual medicine consumption.
Say No to Email Ads
Clean up your email by unsubscribing from marketing emails of your favorite brands. Online shopping is too convenient, which is why people often overspend without thinking twice. The only way to get rid of temptation is to look away!
Swap Your Stuff Instead of Buying
Look for things at home that you no longer use and swap them for things you need! Deals like this are great for replacing furniture, used books, CDs, and other things that are just stowed away to collect dust in your home.
Don't Spend Your Tax Refunds!
If you’re expecting a tax refund, bonus, or any large sum of money this year, give that cash some purpose by sending it straight to your down payment fund. It’s not every day that you get this kind of money, be wise about where to put it!
Record Your Expenses
Keeping track of your spending habits is a great way to make sure that your finances are under control. If you know where your money goes every month, it's easier for you to make the necessary adjustments that can save you a lot of money.
Treat Yourself!
Depriving yourself too much will only take a toll on your spending plans. You want to save as much money as you can, but don't do it to the point of unhappiness! You deserve to get yourself that delicious piece of steak now and then.
See? Saving money doesn't have to be hard and intimidating. You can still live a comfortable life now while saving up for your future home.
Follow this guide for a year or two, and you may be surprised by how much money you’ve managed to set aside for a down payment on a home. Start today!
