6 Tips On How to Save Money For a House
If you are thinking about buying a house in the near future, it’s time to start planning and saving now. According to the Census Bureau, the average sale price of a new home in the U.S. is $358,200. Purchasing a house includes costs like a down payment, closing, and inspection. In general, a down payment for a house is typically 20 percent so you’ll need to save $71,640 for a down payment. Saving money for a house can seem intimidating especially if you are a first-time home buyer so we’re here to share 7 practical tips on how to save money for your future dream home.
1) Create a Monthly Budget
Once you’ve figured out how much of a down payment you’ll need, it’s time to create a monthly budget. Analyze your spending habits and come up with a detailed plan that best fits your current financial situation. Set a specific goal of how much money you want to save by how long and stick to the plan as much as possible! You can track your progress with apps like Mint or DollarBird.
2) Create a Dedicated Bank Account
Create a dedicated bank account for your housing fund and set up automatic transfers into the account. Let your payroll department know the set amount you want to be sent to the dedicated bank account every paycheck. This allows you to see exactly how much you have saved up and it will also keep you from spending the money elsewhere.
3) Save small, big & extras
Take a look at all your expenses – daily, monthly, and yearly and decide what areas you can cut back on. There is a variety of ways, small or big, for you to save money.
There are a few ways you can save small amounts of money daily. Keep the change! Many banks provide a card service that rounds up purchase amounts to the nearest dollar. And the change is then put into a savings account. Reduce or completely cut off any purchases on new clothes, shoes, and daily expenses like coffee. Try to cut down on eating out and going to the movies. Instead find some fun alternatives like a fancy homemade dinner or a movie night at home. The little amounts may not seem like much but they will definitely add up over time and help you buy your dream house.
Saving big allows you to make the bigger impacts on your house savings. Find alternatives for monthly subscriptions like gym memberships, cable TV, and magazine subscriptions. Instead consider trying to work out at home or outside, subscribing to Netflix and going to the library. Also, try cutting down your transportation costs like gas and parking. See if you can carpool or take public transportation.
If you got a tax refund or a bonus at work it’s tempting to treat yourself while you’ve been saving. Rather than spending it put it in your housing fund immediately so that you don’t spend it elsewhere.
4) Work Overtime
If you are able, you might consider working more. You can ask for overtime, additional work or even a few extra projects each month at your workplace. If you aren’t able to increase your workload at work, try finding a job that interests you outside of your current field. You can also try monetizing your hobbies. Make the most of every opportunity that comes your way! You might even consider going through all of your stuff to see if there is anything you might be able to sell. You can list and sell them on sites like eBay and put the money towards your housing fund.
5) Downsizing Before Upsizing
Downsizing before you buy a new house is another great opportunity for you to save money. Depending on where you live, moving from a two-bedroom apartment to a one-bedroom apartment can drop your rent by twenty to thirty percent! Also, if you have an extra room to spare, you try renting it out. And put the rent money towards your future home’s down payment.
6) Invest Your Money
After your savings start to grow, carefully consider investing in low-risk investments like a high-yield savings account or credit union (CD). When saving for a short-term goal, it’s best to stick with low-risk investments. Higher-risk investments may give you a higher return, but there is also a much greater risk that you will lose your money.