4 Tips To Save For A Down Payment While Renting
One big issue that our generation is facing, is that we are barely scraping by, and somehow we are supposed to buy a home of our own. I have been asked by several readers how to start saving for a down payment, so I know this is a pressing topic.
There are different philosophies on how much money you should put down when you buy a new home whether it is 3%, 20%, or even 100%. Regardless, it is important to create a plan or a timeline to keep you on track. Based on my experience I would recommend at least 20%.
By using the tools I have on this blog I am confident you can reach your money goal. If your goal is to save money for a home, here are 4 tips you can start right now to begin saving for your first place.
Tip #1 Get Excited
Buying a place of your own is exciting! You get to decide what kind of layout you want, a perfect location, amenities, etc. creating this list can be very motivating. Imagine yourself in a specific home, painting the walls whatever color you want, getting a pet, hanging your pictures with nails :).
When I was trying to figure out how much I needed to save, I started looking at places to get an idea of prices. Not only did it help me become more disciplined with my budget, it also made me believe it was going to happen. When you know how much something relatively costs, you can begin to create a specific, realistic plan to get it. It’s hard to save for a down payment if you have no idea what that means, or what homes in your area cost.
What region do you want to live in?
How many beds/bath? What year will it be built?
Fixer upper or move in ready?
Pool? Shopping? Hiking? Commute?
These are all questions that will get you pumped to start and stick to your savings goal.
If there is a place you really like, save a picture of it and add it into your goals. Maybe even go look at it with a realtor to really get into it :). Once you get an idea of the cost you can figure out how much you need to save up.
Tip #2 Cut Your Expenses
Do you spend money on a gym membership you never use? Let’s say that is $50 per month…boom now you have $600 a year extra.
Do you eat out for lunch every day? What if you cut out 3 days? If lunch is $10 per day, that is $30 per week, after a year that’s $1560 you can use.
There are many different ways you can cut down your expenses, when done over a long period of time, you will save significantly.
Related Post: 3 Minimalist Habits Everyone Should Try
Tip #3 Get Intense about Your Goal
Some people say they want something but never take action to get it. If you want to reach your goal of having a down payment, try and make it into a trackable goal. For example, if you want 30,000 in 12 months, figure out how much you need to save each month to get there.
Make your goal all you think about. I do this by using the daily creed I made, which helps me keep my goals top of mind.
Remember the quote, if you want something bad enough you will find a way, if not you will find an excuse. One idea that isn’t the most popular is moving back in with your parents or even getting a roommate for your current place, but it could make a world of difference in the long run and help you reach your goal at an accelerated pace.
Tip #4 Control your Spending
You have thought about ways to cut your expenses, you are getting intense about your goal, now you need to control your spending. Do you have any idea how much you spend on eating out each month? Grabbing a morning coffee? Or how about on drinks? What if instead of buying drinks last month you saved all that money…some people I know would be rich 🙂 lol.
I am not saying stop having fun or even stop going out. What I am saying is get some self-control in your life.
If you have a goal and you want to achieve it, start controlling your spending and you will have more money. An easy way to take control of your spending is by doing a simple budget. If you already have a budget in place, are there areas you could cut back to have more money to save?
There are pros and cons to renting and if you are serious about buying a place of your own these 4 tips are very important. I “rented-ish” for 3 years in my parent’s basement and I used these principles to save up enough to buy my first place. Trust me, you can do it. If you need help, hit me up.