How Do I Save For a Down Payment on a Home?

Create a budget

The very first step to saving for a down payment on a home is creating a budget. Make sure to check how much you will need in your savings account ready once you have bought your home and create a budget accordingly.

Set a particular amount for each expense category and make sure you are sticking to it. You'll use this to make sure you don't overspend on certain items.

Cut out some expenses

Together with creating a budget comes one of the most difficult steps for saving for a down payment on a home - cutting out some expenses. The best way to do that is to record your expenses for a period of about 2-3 months and track where the majority of your money goes to.

You'll begin noticing trends among your spending habits and will quickly find out how much you are spending on a daily cup of coffee from Starbucks or monthly subscriptions like Netflix, etc.

We are not saying that you have to fully cut all your expenses, but take this opportunity to evaluate your spending habits and decide what your priorities are!

Increase your income

Increasing your income might be easier said than done. Some examples could be to begin asking your employer for a pay raise (especially with inflation at 40 year highs!). Depending on your employer relationship, you might be able to discuss your plans for buying a home.

Even if you are not in a position to ask for an increase of salary, there are some other ways to make some extra money: TaskRabbit, Uber driving, flipping furniture, etc.

You might want to look at getting a side gig - there are multiple platforms that you can use for that!

Rent out

Renting out a room in the place you are living in or your parking spot might be some great ways to bring some additional money to your monthly income. This all depends on if are able to sublet a room in a home that you rent, or try the AirBnB arbitrage.

Yes, it might be an inconvenience for awhile, but remember what your end goal is and think about being a step closer to owning your dream home!

Downsize / Resell

If you are still wondering how to save for a down payment on a home, here is another easy tip: consider downsizing!

Going through your things and removing the clutter has two benefits - first, you will have less things to transport when moving to your new home and second, you will find things that you have totally forgotten about.

Never used electronics, barely worn clothes, multiple kitchenware - all of these are things that you can easily get rid of and resell. It might not bring as much extra money but every dollar helps!

Pay your debt first

Last but definitely not least, before jumping into buying your own home, have a look at your debt. You might have a student loan or monthly car payments that you would like to take care of first. Credit card debt is also something to take urgent notice of.

These take a large chunk of your salary and instead you could be saving them for a down payment on a home!

Now that you have our best tips on how to save for a down payment on a home, are you ready to jump into the process and get a step closer to having your dream house.