If you are not yet a homeowner, then likely you have a goal to own your own home one day. That’s great! An important and necessary step to achieving this goal of home ownership is … wait for it …. your down payment amount!
A significant down payment amount will go a long way in terms of helping you to properly prepare for home ownership.
But with all our other responsibilities and priorities, it isn’t always easy to save that money. Does it seem your efforts are often sabotaged by competing priorities?
But it is possible to save for that down payment. I promise!
Here are my TOP 10 ways to save money for a down payment! You can do this!
TIP #1: MAKE IT HARD TO SPEND
Move your savings from your chequing account into another separate account that doesn’t have a debit card attached.
TIP #2: AUTOMATE YOUR SAVINGS
You might have heard this a lot. Well, there’s a reason it keeps getting repeated and emphasized. It works! Out of sight . . . and, yup, out of mind! So, set up an automated process through your bank that will allow you to transfer a specified amount from your paycheck to a savings account on a regular basis (probably each time you get paid).
TIP #3: PRIORITIZE YOUR SPENDING
This one is hard for most of us (me too!!). But you’ll get a huge reward at the end – your home! Discipline yourself by delaying immediate gratification. That new restaurant that you absolutely must try out this weekend? If it’s going to set you back some, then maybe consider doing something a bit more budget friendly and put the savings aside. That trip you’ve been thinking about? Well, maybe try a ‘staycation’ and throw the money into your savings account to go towards your down payment.
Set specific savings goals and give yourself regular reminders of why you are tightening your budget. These good habits that you develop by being more financially savvy will benefit you as a homeowner too. As a homeowner, your expenses and costs will likely go up so you will have to budget more and be more fiscally responsible.
TIP #4: PAY A FEE FOR IMPULSE BUYS
Match impulse buys with an equal amount into your savings. Double savings on every amount you spent. This is an effective way to control impulsive purchases and manage your spending. Tempted to buy a newly released gadget? How about a nice piece of furniture in the store? It is always a struggle to control one’s spending. But hey, just keep going! Eye on the prize- your future house!
TIP #5: BORROW FROM YOUR RRSP
Right now you can withdraw up to $25,000 from your RRSP to buy your first home. So if you have money in RRSPs, then consider borrowing it to help with your down payment. If you don’t, then it may be a good time to start saving money for your RRSP. This way you can get a tax credit to help reduce your taxes and also later withdraw from it for your down payment. Keep in mind though, that you will have to pay the money back to your RRSP within 15 years. Please check with your financial planner or advisor to see if this option will work for your needs.
Or message me and I can refer you to someone you can speak to!
TIP #6: USE THE TAX FREE SAVINGS ACCOUNT
You can also see if a tax free savings account would be of benefit for your savings program. The money in the account is allowed to grow tax free. So you will not have to pay income tax on the money you earn as it grows in this account. Again, please consult your financial planner, bank or financial advisor to see if this is something you can do.
TIP #7: DON’T WORRY WHAT YOUR FRIENDS THINK – BE CHEAP!
No, I’m not saying you can’t have any more fun or you can’t donate to charities or organizations close to your heart (please do)! But, take the time to consider cheaper ways of doing the things you love to do. Smart people save money by finding cheap or less expensive alternatives to doing or buying the things they enjoy. And the extra money you save by doing this? Why, of course, it goes straight into your savings! Boom!
TIP #8: MAINTAIN OR LOWER YOUR CURRENT SPENDING
Even if your earnings increase, as much as possible, avoid incurring more expenses. Maintaining your current spending despite increase in income or if you get the chance to actually lower your expenses can help you save more. Think about it. Not only do you get to easily save for your dream house’s down payment but also save more into your personal savings account.
TIP #9: CREATE A BUDGET
This is an oldie (old advice) but a goodie (good advice that works!). A budget is very important and can even help you to note areas where you can lower your expense and increase your savings.
Visit this page and make use of the free printable monthly budget sheet to track your expenses.
TIP #10: DOWNGRADE YOUR LIVING ARRANGEMENT
Consider if you can reduce the cost of your major living expenses, including your rent and car. If you have two cars, can you consider using only one car? Are there monthly payments that you can eliminate or reduce? Go over a list of major expenses line by line and carefully evaluate areas where you can cut or trim costs.
Do you have other tips for saving for a down payment in mind?
If you’ve been successful at saving for a down payment, what ways of doing it worked for you?
Please share it and help our readers to get closer to their goal of home ownership!