How to Save for a House with a Cash Envelope System

Property Manager with Frozen Pennies

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!

Comments (12)

Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Saving for a home is tough for most people. They'd be surprised how quickly they could save with small changes in their spending and savings habits.

Feb 13, 2021 12:27 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Feb 14, 2021 04:04 AM
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

These are some important things to consider when saving for a down payment. It takes time & discipline to achieve your goals.

Feb 14, 2021 01:26 PM
Kat Palmiotti
406-270-3667,, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

These are all great ideas. The dollars saved add up. Making coffee at home instead of buying it out. Canceling some rarely-used online apps. It all helps!

Feb 20, 2021 05:14 AM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Sara. Great tips and some are easy to follow during the pandemic. Hopefully some will become habits to be contiued once the pandemic is over. Enjoy your day.

Feb 20, 2021 05:46 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

That emergency cash envelope is critical to any home owner as stuff always happens

Feb 20, 2021 06:05 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Sara - having a plan and sticking to it is an excellent idea.  Whether it is meant for saving for a house or something else - the tools one learns can be beneficial for a long time.  

Feb 20, 2021 06:30 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Sara Conklin ,

I'm so glad that Carol Williams featured your post in her Second Chance Saturday Series as I missed it! You've provided some great tips to help making a plan and sticking to it. Small changes in your spending habbits really make a difference!

Feb 20, 2021 09:25 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Sara Conklin - this is not a bad idea.  Goes back to the days of my parents.  They used envelopes.

Feb 20, 2021 12:40 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

I think it can be hard for many people to save money but these are some terrific suggestions that anyone can follow.


Feb 20, 2021 01:02 PM
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-801-5525

Sara, Great tips explained in terms even newbies to the world of finance and home ownership can follow.  You must have a great business with first-time buyers.

Feb 20, 2021 09:18 PM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Thank you Sara Conklin for sharing this info and design a great day!

Feb 21, 2021 07:58 AM