Down payments are a necessary part of homebuying. They typically amount to 3-5% of the overall cost of the home, and while there are other expenses, such as home inspections and closing costs, the down payment is by far the biggest chunk of money you will need.
There are any number of ways to save for the down payment, but below are five of the easiest tricks to start implementing today!
Tip #1 - Set up automatic transfers from your checking to your savings.
The best time to do this is after you get paid. Arrange with your bank to transfer a set amount of money to your savings account when you get paid. Even better, name that account "future home," and make a pact with yourself to not touch that money for any reason.
The beauty of this arrangement is that after a while, you won't miss the money you are pulling out and the amount in your savings will, quite suprisingly, begin to add up quite quickly!
Tip #2 - Put aside bonuses, raises, and tax refunds.
In the bank account marked "future home," dump any bonuses and tax refunds.
Get a raise? You are already used to living without that money, so put the money into your savings account every month as well.
"The home should be the treasure chest of living." – Le Corbusier
Tip #3 - Skip costly vacations.
Even skipping that vacation or vacations for one year can make a big impact on your savings for a future home. Remember, you can take vacations once you get into a dream home and start making your way toward real estate wealth.
Tip #4 - Reduce monthly expenses like streaming, coffee, Doordash, etc.
Starbucks coffee, on average, costs $5 depending upon the size and the type. Most other coffee chains charge similar amounts. If a person buys coffee four days a week, then that person is spending $20 a week. $20 x 52 weeks in a year equals $1,040 a year.
Another example of compounding expenses is having groceries delivered, such as from Walmart. My local Walmart charges $8 to deliver groceries, not including a tip. If you tip the delivery person even $2, then that's $10, and if you have groceries delivered twice a week, that's $20 a week. Again, like coffee, that equals $1,040 a year just for food or grocery delivery.
Need your coffee and groceries? There are a number of alternatives, from making coffee at home to stopping and buying your groceries the old-fashioned way.
Tip #5 - Pick up a side-hustle, like freelancing, pet sitting, or ridesharing.
Side hustles don't have to be forever. Remember, you are working toward a goal, and once that goal is reached, you may not necessarily need the side hustle any longer.
Side hustles are also not confined to those given above. Deliver those groceries and that food to others who are not as smart as you! Tutoring, adult sitting, or even picking up a job on the weekend can all help you save that money for your dream home!
Ready, set goals, GO!
None of these strategies will work without a clearcut idea of how much you want to have to buy that home and creating strategies for how you will get that moiney. Its a good idea to write those goals down, including a dollar amount for the home you wish to purchase and the down payment plus other funds needed. Then, write down 4-5 strategies to help you reach that goal.
And always keep the goal in mind. Never lose sight of what you are working toward.
And soon, you will have the money to make your dreams come true, and you'll be ready to write YOUR story in YOUR home!
Donna Hechler Porter is a real estate agent with Keller Williams Elite Realty in Baytown, Texas. An educator, a published author, and the owner of The Inky Elephant, a real estate transaction coordinator business, Donna educates people in how to build future wealth through home ownership. Feel free to contact Donna at dhporter@kw.com.