How to Save For A House
1. Build a strong budget
The first step in the saving process is budgeting. If you don’t know where your money goes every month, it’s impossible to divert money to your down payment.
First, sit down with your bank statements and all your credit card payments. Look at where you’re spending the most money. Note how much you spend on necessities like rent, student loan payments and utilities. Then consider how much you spend each month in nonessentials like entertainment, restaurants, etc. A budgeting app can help you automate this process if you’d like to avoid calculating your expenses yourself.
2. Consider Downsizing
One fast way to save more money toward a down payment is downsizing. Downsizing is the process of reducing your expenses and living below your means while you save. When you downsize, you reduce the amount you pay for necessary expenses and instead divert that extra money into a savings account.
Moving into a smaller apartment, selling one of your family’s extra vehicles or moving to a more affordable area are all great ways to downsize. Many people downsize while they save for a major purchase. You may find that you enjoy the simple life.
3. Reduce Or Cut Out A Bad Habit
Reducing or entirely cutting a single bad habit can help you put away hundreds of dollars a year. Consider quitting these unhealthy habits and divert the money to your down payment fund:
Impulse buying: If you're prone to impulse shopping in person or online (who doesn't love getting deliveries?), you may consider cutting down on those purchases. Try to unsubscribe from marketing emails so you don't constantly see deals in your inbox. You'll save money and avoid piles of clutter around your home.
Getting takeout: Takeout and fast food are great, there's no denying that. But, it's not so easy on our wallets. Try cooking a few meals at home each week instead of ordering out.
4. Ask For A Raise
Do you have little money left over to save after you get paid? It might be time to ask for a raise. Use these tips to increase your chance of success.
Time it right: Timing your salary conversation is the best way to set yourself up for success. Avoid asking your manager for a meeting during a hectic project or when time is at a premium. The best time to ask for a raise is during your annual performance review – but during the weeks after completing a big project is also an excellent choice.
Come prepared: Never walk into a salary discussion unprepared. Gather specific performance data and results from the projects you’ve worked on. Lay out exactly how busy you’ve been and what you’ve been working on. It’ll help show your manager that they can’t afford to lose you.
Be confident but grateful: Your attitude during your salary discussion meeting is just as important as what you say. Be confident in what you’re asking but also grateful and enthusiastic. Let your manager know that you envision yourself growing with your company and that you’re excited to take on more responsibilities.
5. See What Other Employment Options Are Out There
Switching jobs and landing a higher-paying salary can help you save money for your down payment.
Browse job posting sites and salary comparison websites to see if you earn as much money as people who work in similar roles. If you discover your salary is below average, consider using your findings as leverage to ask for a raise or inquire about a promotion at work.
If you aren’t in love with your job or you can’t get a raise, consider searching for higher-paying positions you qualify for.
6. Skip A Vacation
Exploring a new destination can be an amazing experience. Unfortunately, it’s also often an expensive one. The average family of four spends about $4,500 on vacation – that’s a big chunk of cash.
Consider storing that money for a down payment and enjoy a staycation in your city instead. Here are some ideas to get you started.
Explore historical sites near you: You don’t need to book a flight to London or Milan to experience culture. The United States is full of rich, exciting history. Visit a museum, nature preserve or historical site near you for an injection of culture at a fraction of the price.
Plan an at-home spa day: Dreaming of a trip to the spa? Replicate the experience on your own with an at-home facial kit, bubble bath and plenty of candles. You can even order a beauty subscription box for around $10 if you’d like a surprise while you indulge.
Try a local cooking or art class: For many travelers, the joy of trying something new is one of the best parts of a vacation. Test out a new dish at a local cooking class or create a piece of artwork at your nearby recreational center for a low-cost learning experience.