Take These Steps To Save Money For Your Down Payment.
Buying your first home is an exciting event and one that most of us look forward to for months if not years. Thinking and planning where you will live and what kind of home you want to buy is great, but while you are planning, be sure to start saving your down payment so you will be ready when you find your perfect home.
If it sounds impossible to save money for a down payment on your first home take heart! You can do it! You need a goal and motivation to help you grow your savings but you can do it. Here are the first important steps.
Open A Savings Account
Open a savings account online or at the same bank or credit union where you now do your checking. The reason to use one institution is convenience: Most banks and credit unions allow you to transfer funds back and forth from accounts electronically and instantaneously. That means you can move money into savings from your checking account without visiting a branch or taking much time from your day — and you want socking away savings to be as easy as possible.
Start a Budget
Every company has a budget, and so should you.
The easy way to establish a budget is to use a spreadsheet — show your monthly gross income and then subtract taxes and other costs from your pay stub. This will give you your net income after taxes. Next, show what you pay for other monthly costs such as rent, student loans, car payments, and credit card bills. Subtract these costs from your net income.
Now comes the fun part. How much money is left each month — and how do you spend it? Start keeping receipts for such things as gasoline, utilities, restaurants, entertainment, parking, and other things you spend money on.
In very short order you’ll be able to see how much you take in — and how much goes out. Now you can ask the magic question: Where can costs be cut?
Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits (meaning spend less) and avidly look for new savings sources.
This may seem difficult, but it’s a reality that every household can save more. We know this because no matter how much you earn there are people with smaller paychecks who live in your neighborhood and yet live more or less like you do.
To create savings you have to be ruthless. Set a time to review your spending and budget, say the first and third Mondays of every month. Go through the numbers with zeal, asking if every nickel and dime was justified.
– via The Simple Dollar
Multiple Ways To Save Money For Your Down Payment
Everyone knows that it’s tough to save money. Like many new skills saving money is all about learning the tricks. If you learn a few secrets you didn’t already know you’ll find new sources of savings and you just might find that it’s exciting every time you find extra money you can save for your new home! You’ll love watching your down payment account grow as you save money from the new secrets you’ve learned.
Down payment savings hacks
Whatever your down payment goal, it can help to mount a multi-tiered attack. Here are some savings hacks:
- Automatic transfers from your checking account to your savings can help to make the process mandatory — and maybe a little less painful.
- The $5 bill savings plan. Every time you receive a $5 as change, you set it aside. One woman claims to have saved $36,000 with this little trick, though it took 12 years.
- Save raises and bonuses rather than spending them.
- Set aside tax refunds.
- Keep the change. At least a couple of banks have variations on this theme. For example, Bank of America allows debit card users to sign up for a service that rounds up purchases to the nearest dollar and puts the change into a linked savings account.
- Use cash rewards credit cards to get cash back on purchases and put the rebates in savings.
- Snag a few bucks here and there. Got a checking account a few bucks over a round number? Take the extra and transfer it to savings.
- Keep the car and save the payment. Paid off your car? Resist the urge to buy new and save the monthly payment.
- Start fast, and the momentum will build. Seed your down payment fund with a bonus or other windfall. A quick start might motivate you to see the balance build even bigger.
- Visualize your goal. Slap big, beautiful photos of your dream house on the refrigerator, near your office workspace — and wrap a small one around the primary credit card in your wallet. You might charge less and save more.
- Use an app to track progress. Mint, SavedPlus, Dollarbird and other budgeting tools may give you even more incentive to save.
– via NerdWallet
Are you currently saving for a down payment on your first home?