When my coaching clients mention that their "why" for getting their finances in order is to buy a home, I know they are going to be a motivated client. Homeownership is a great motivator for paying off debt and getting organized.
Here are some tips to save money for a down payment.
Consider your spending habits.
Do you have a budget? Budgeting is the very best way to control what's going out and what's coming in.
Cutting back spending in specific areas like entertainment and groceries will give you more money to save.
Consider using a cash only management system for areas you overspend in. Putting a dollar limit on each area that you tend to spend too much in will give you the confidence and control to reach your goal faster.
The cash envelope system is the perfect tool for this money management technique.
Do you have an emergency fund?
Having an emergency fund in place will give you the peace of mind to sock every extra penny into savings. And you know things are going to come up.
How much house can you realistically afford?
Many experts agree that your housing costs should be no more than 30% of your income. As a financial coach, I would suggest keeping it as far under that number as you comfortably can. The less your home, the faster it's paid off.
Do you have debt?
Finding a plan to help you pay off your debt before adding more onto your shoulders is a good plan. There's more than just a mortgage every month when owning your own home.
For ways to cut back and save for a down payment, check out the tips in this article:
Some tips to save faster.
Saving money on groceries: Meal planning, coupon cutting, and making more food from scratch can all add up to significant savings on your grocery bill.
Sell stuff: Look around your apartment or home and find things that you are no longer using and can sell. Even small sales will push you faster towards your goal of buying a home!
Start a side hustle: A side hustle is an amazing way to amass money quickly. There are lots of options available for part-time work including driving for Door Dash, Uber or Lyft. Teaching English as a second language online, starting a craft business or doing transcription work. Think about the skills you have that you could turn into a money-making side hustle.
Cut down on utilities: Monthly utility bills can take a big bite out of our income. Consider ways to cut down on your utilities including lowering your thermostat, using energy-efficient light bulbs, and using window coverings that keep heat in (or out!). Many local utility companies will come to your house and do an energy efficiency check for a nominal fee.
Cut out cable: With all of the options for streaming shows, cutting cable isn’t as painful as it once was. Cutting out cable and choosing one or two streaming services can save you a lot of money that can go towards your new home.
Eat at home: Eating out is much more expensive than home-cooked meals. Bring your lunch to work, plan out your meals and eat at home to save on your grocery and dining expenses.
By incorporating just one or two of these tips, you could be well on your way to homeownership that much faster!