Purchasing a home is likely the largest purchase you will ever make. Even though the vast majority of buyers will finance a significant portion of their home, saving up for a down payment is still extremely important. Here are some ways to free up some money to save for this purpose:
- Set a budget. If you don’t know what you have going out each month, it’s hard to know how much you can save.
- Look for a savings account with a higher interest rate. It may not seem like a lot, but over time a slightly higher interest rate can make a world of difference, especially as your balance gets bigger.
- Create a second source of income. Consider part time jobs, or look for work in the gig economy, such as ride-share services and renting out a room.
- Live with your parents or find a roommate. This may not be the glamorous setup you imagined, but it may make your ideal situation happen sooner.
- Sell unused valuables. Use sites such as eBay and Facebook Marketplace to unload items you no longer need or use.
- Deal with your debt. Debt works directly against savings. Not only do you owe the money to your creditor, you also owe interest on that balance.
- Look for savings when you shop. Finding deals and planning out your purchases will help you save in ways you may not have thought of before.
- Review your finances. Take the time to dig deep into your numbers so you understand the big picture and make any necessary changes.
- Check your eligibility for government assistance. There may be certain home-buyer credits you qualify for. Ask your financial advisor if any apply to you.
- Look into your transportation costs. You may be better off downsizing your vehicle, taking public transportation, or finding other ways to reduce your costs when you travel or commute.
No matter how big or small your goal, having a plan and some good, old-fashioned discipline will help you set aside the money you need to have an adequate down payment for your next home purchase.