15 Aug Tips to help you Save for a house
Thinking about buying a house but don’t know where to start? Are you intimidated by the down payment? Saving for buying a house can be a monster in itself and many people have no idea how to begin the process. It can be daunting or even seem impossible. However scary it may seem for you, there are many simple steps you can take to make sure saving for that down payment is within reach. Are you willing to cut back or down size? Can you make small adjustments or create a reasonable budget? If you’re willing to adjust how you save, our top 8 tips by Keylo University will make saving for a house achievable.
Table of Contents
1. Create a Budget
The best place to start is creating a budget for yourself. Categorize your expenses and evaluate your spending priorities. Break down everything you spend and consider if it is a necessity. Make sure to give yourself allowance for groceries, entertainment and occasional treats. Put a specific amount into each of these categories.
Try carrying an allotted amount of cash for day to day expenses instead of a credit or debit card. People are typically more mindful of their spending when it comes to cash. Identify your savings as a non-optional expense in your budget and only allow enough recreational expenses to accommodate that.
Once you nail down a clear budget, hold yourself accountable and stick to it. If you need help creating a budget, check out this guide by Forbes for best budgeting apps of 2022.
2. Cut back unnecessary expenses
Start off your saving journey with finding any bad spending habits or eliminating any expenses that aren’t essential. While it may be an adjustment to make these changes in your lifestyle, it is fundamental in saving for a house.
Impulse Purchases
We get it, you see a good deal on something you didn’t know you ‘needed’ and justified buying it because it’s 50% off. These things tend to add up and can take away from money that could be put into your down payment fund.
Avoid spending too much time in the mall or shopping center by creating a list of the things you need, where you are getting them from, and prevent yourself from ‘browsing’. Additionally, scan your mail inbox for any recurring flyers that you may receive and unsubscribe. This will prevent you from impulsively adding any needless sale items to your shopping cart online.
Delivery or Dining out
Ordering food to your door or going out for dinner at a fancy restaurant are luxuries that should be treated as such. Buying groceries and cooking every meal can be a headache or seemingly inconvenient task. Nonetheless, it is a good habit to get into if you are trying to save money and can eventually become effortlessly ritual.
Budget a nice evening out or a meal delivery once a month (or biweekly) as a reward to keep you motivated. It is important to allow yourself simple luxuries every once in a while, otherwise it is going to feel like you are punishing yourself and you will fail.
Entertainment
Make sure you are doing things that keep you happy and content with your life, but do it on a budget. If you have expensive hobbies, try picking one to focus on or choosing cheaper ways to participate in them. Instead of buying a new book to read, get a free library membership. Instead of going to the movie theater, stick with cable. Are you an artist? Try a cheaper alternative for paints.
Membership or Subscriptions
Look at all of the small membership or subscriptions you have and cancel the ones that aren’t an absolute must. Do you really need a subscription to every tv streaming service ( ie. netflix, amazon prime, disney plus)? Try getting rid of all but one or asking a family member to share their account. Alternatively, maintain one of these accounts and cancel your cable services.
Can you listen to the radio instead of paying for a music subscription? Work out at home instead of dishing out dollars for a gym membership. If that doesn’t work for you, head over to a free outdoor gym to workout or go for a run outside. These things may not seem like a huge expense, but they add up. The less monthly memberships or subscriptions you have, the more money you can allocate to your savings.
Skip the Vacation
Vacations can become a pricey expense. Put that lump of cash toward saving for a house and opt for a staycation instead. Drive out to a nearby lake for the weekend to enjoy the beach and a bit of nature. Plan a spa day at home. Have a picnic at rundle. There is plenty to do right here in Edmonton that will be a fraction of the cost or even free. Check out Explore Edmonton for things to do when you are planning your staycation.
3. Downsize
Practice minimalism by downsizing your life and living below your means. This ensures you are only spending money on things that are absolutely essential and reducing your expenses.
Living Space
Rent eats away a large chunk of your income. Look at ways to reduce your rent so it is less than a third or even a quarter of your earnings. Move into a smaller apartment in a more affordable area or get a roommate to pay half your rent.
Sell a Vehicle
If you and your spouse each have a vehicle, think about selling one. This could save you hundreds of dollars a month on gas, car payments and insurance. One or both of you could potentially take transit, walk or bike to work if the distance is reasonable. Perhaps carpooling could work. Try parking your car for a while to see if this works for you. If you discover that it can be an alternative, then sell it.
Purge the Clutter
Remember all of those impulse buys we discussed earlier? Get rid of them. Selling anything that you don’t need can give you some extra dollars to put toward your down payment. Go through your closet to find any lightly worn clothes that you don’t wear to list online. Empty out the bookshelf that has all of the old novels that you probably won’t read again for resale. Hell, list the bookshelf too.
Look around your home for anything that you could sell; furniture, clothes, books, board games, movies, appliances, ect. Every dollar counts.
4. Skip the gifts
We all love receiving gifts on our birthday or during the holidays. Unfortunately, this contributes to more clutter that we don’t need. Leverage these special occasions and ask for gifted money instead of novelty items. Share with you loved ones your goal of saving for a house and they many feel more than happy to contribute to a down payment
5. Ask for a raise
If you are having substantial trouble saving for a house, it might be time to ask for a raise. Be confident but humble when asking for an increase in your salary. Let your manager know you are excited and passionate about growth potentials within the company. Show up prepared and outline why you deserve to earn more money. You want to reinforce the value that you bring to the team.
Additionally, make sure that you schedule this conversation at the right time. If you bring it up at your next performance review, this will allow you to highlight all of your strengths. If you simply can’t wait until your next annual review, aim to pitch a raise right after a big win.
6. Pick up a side hustle
If a raise just isn’t in the cards right now, that is okay. There is ample opportunity for you to earn extra income in other ways. Explore all of the options and find something that is right for you.
Contract or Freelance
Use the unique skills or knowledge you have to your advantage by contracting them out. You can pick up small gigs or find projects for pretty much everything. Are you an exceptional writer? Do you do photoshoots as a hobby? Do you paint, play an instrument or sew? Take a look on UpWork or Fiver for individual jobs that could utilize these skills. Perhaps you have a background in mechanics and can offer at home oil changes. Are you efficient in house work? Do you know how to put together a table? Vist Taskrabbit.
Create an Online Store
If you are a creative and can’t find contracting work for your specific hobby, make a store on Esty. There you can sell handmade or personalized items.
Rideshare or Delivery
Driving for Uber or delivering for SkipTheDishes could be the right path if you have a reliable vehicle and clean driving abstract. These companies allow you to capitalize on your free time and make some extra cash.
Sitting Services
If you love hanging out with children or furry friends, reach out to your friends and family to offer sitting services. Babysitting or pet sitting for business professionals or vacationing families can be an easy, stress-free way to earn some quick money. In addition, if you love animals, you can walk dogs for an hour a day. Now that is easy money.
Renting
If you have an extra room in your house or an unused basement area, you can share the space on places like Airbnb. You have complete control over when it gets rented and who is renting it. If you feel comfortable with having guests in your home, this can help supplement your income.
Moreover, you can also rent out a parking space during the day if you live downtown. Professionals who may work close by might take advantage of cheaper parking by renting from you instead of paying hundreds more parking in underground office spaces.
7. Pay off debts
I know what your thinking … “How can I save when I am spending extra money on debt payments?” To answer that simply, all of that extra interest you are paying is taking away from money you could be saving. By paying off your debts sooner rather than later, you can reallocate that interest to saving for a house.
But how?
Start with the lowest debt accumulating the highest interest. Pay it off in full using the extra money you have earned from your side hustle or purging sales. Use the minimum payment for the debt you just closed and add it to any usual payment for the next debt. And so on. As you pay off each debt, you will be freeing up more money to make higher payments for others. Ultimately, you will be surprised how fast this will clear up your capital.
Not only will this help make saving for a house easier in the long run, it will also benefit your eligibility for a mortgage. Lenders look at your debt-to-income ratio when considering you as a candidate. The lower your DTI is, the more likely you are to be approved when it comes time to get a pre-approval.
8. Auto save
One thing that may make putting money away and saving for a house easier for you is automating your savings. Create a separate savings account for your home fund apart from your primary banking account and place your deposits on autopilot. Schedule an automatic withdrawal every payday so it is out of your hands. Speak to an advisor about a tax free savings account as an option.
Another great way to effortlessly save more, is by rounding up all of your purchases to the nearest dollar. This might not seem like much, but spare change can add up exponentially in the long run. There are services like Acorn that will do this for you automatically and transfer it into an investment account. The great thing about these is that you won’t even notice that you’re saving.
In Conclusion
Saving for a house may be a daunting task … sure. Don’t let it deter you from getting started. You can take the first steps toward building your savings by following any of the above tips to your life. Whether you start with your debts, pick up a weekend job or working on implementing a budget first it is a step in the right direction. If you are still having doubts, reach out to a financial advisor to help. Go head, take the leap.
Contact Ryan Mracek for advice or find out how you can get a financing free approval before you start hunting for a house!
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