It’s been almost 5 years since my wife and I purchased our first home in Toronto.
With prices trending upward each year, saving money for that down payment becomes harder for the younger generation.
Not only are home prices going up, but other basic living expenses are rising too.
Most millennials are hoping to move out of their parents’ basement.
I also have friends who are just tired of renting while trying to save money for a down payment on their first home. Let’s not mention, it becomes even tougher to save when those rent prices continue to soar.
I get it. The struggle is real!
Despite those challenges, you can still manage to save a reasonable amount for a down payment when you follow these effective saving strategies.
This is a list of tips I recommend following if you’re serious about saving for a house.
1. Know what you can afford
The first step is to be realistic about what you can afford. If you have a partner, this may make it less stressful for both when you share the costs.
When my wife and I were house hunting, we gave ourselves a reasonable budget to work with. We also gave ourselves a buffer in case of any additional costs. For example, we initially gave ourselves a budget of $450,000 to work with, but we were ready to increase that to $550,000 max if needed.
2. Trim or negotiate expenses to save money
I recommend reviewing all your monthly expenses to see where you can save money.
That includes reviewing:
- Cable
- Internet
- Insurance
- Any unused subscriptions (e.g. magazines, Spotify, Amazon Prime, LinkedIn Premium, etc.)
Try to see where you can negotiate for better prices without sacrificing the features you enjoy. Cancel any monthly subscriptions that you haven’t used in the last couple of months.
3. Review your monthly spending behavior
What are you buying on a monthly basis?
How much are you spending on housing items, clothing, grooming items, personal care, etc.?
How much are you spending on groceries and restaurants? Are you able to balance between cooking frugal meals at home vs. going out?
Are you buying too much or overspending?
Ask yourself if you actually consume all those items without putting them to waste. You’d be surprised at how much money the average American wastes!
4. Take advantage of free money resources, saving tools, coupons, and offers.
If you’re already shopping for something, and you know you need it, you may as well take advantage of any free money resources to save or reduce your spending. Every little earning counts, so always check for deals, rewards, or coupons prior to buying anything.
One of my favorite resources to earn cash is Swagbucks. It’s a great saving tool that I’ve been using for almost 10 years.
5. Look into the First Time Home Buyer’s Plan
Speaking of resources that are like “free money”, be sure to check out Canada’s first time home buyer’s plan prior to putting an offer on the house of your dreams.
If you’ve been saving and contributing to your RRSP, you can take out up to $35,000 and put it towards your first home without paying a penalty or tax. Prior to 2019, this amount was $25,000.
You’ll just have to re-contribute the amount back to your RRSP within 15 years.
6. Earn extra money on the side
You can find a part-time job to contribute to your savings. Or you can take on a side gig to increase your income.
Either way, finding ways to make extra gives you flexibility and more options. This can definitely make it financially easier to afford your first home.
A few ideas to help you boost your income:
- Walk dogs using Rover
- Deliver food with Uber Eats
- Drive for Uber
- Refurbish furniture
- Flip items and sell them online (such as clothing or antiques)
- Work a part-time job at your favorite store
- Start a blog for extra money
- Offer tutoring services on subjects you’re good with
7. Bank your bonuses from work
Depending on the nature of your job and where you work, you can choose to put your annual cash bonus away in your savings instead of spending it.
This is what I did, and over the years of collecting my year-end bonuses, I didn’t realize how much I saved!
I actually put the savings into my RRSP and over the years, the balance grew. This is the money I used to put towards the First Time Home Buyer’s Plan. I’m really glad I didn’t use my bonus as leisure spending. :)
I hope this list of saving tips help you with your first home purchase in Canada!
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