Are you ready to buy a home? It is an exciting prospect but can be scary too. This is probably one of the largest financial transactions you will make. There are some things to consider – one of them is the down payment. What can you do to save money faster? Here are some habits to help you save money faster to get that down payment!
Build a reasonable budget
The best tip you can get is to build a budget and stick to it. Determine how much money you have coming in and going out every month. Look at your bank accounts and your credit cards. Divide things into groups like housing, food, entertainment, bills, etc. Then look at each area and see what you can do to reduce your spending. Then put the extra money into a savings account to go towards your new home.
Figure out your “latte factor” and eliminate it
This means what do you spend money on daily or weekly that drains your bank account. Do you spend $4 each day on coffee? Can you start making your own coffee and save money? Do you go out to lunch every day? Could you bring your own lunch to work and save money? Is there something you do daily or weekly that adds up? Look over your spending and see if you can eliminate it. One thought is to take that money you were spending daily on coffee (or whatever) and put it in a jar, then put it in a savings account monthly – you may be surprised at how quickly that adds up.
Make automatic payments into a savings account
Do you get regular paychecks that are deposited into your checking account? Ask your employer if you can make a small deposit each pay period into a savings account. That way you never see the money and it can build up faster. Some people will open a savings account at a bank that is not easy to get to – maybe it doesn’t allow you to transfer money electronically. That way it can be harder to get that money – meaning if you want to spend it, you need to make a trip to the bank – that may allow you to save it and not spend it on a purchase you don’t really need.
Don’t carry credit cards you don’t need
If you are trying to save money, keep your credit cards at home. Carry one for emergencies but try not to use it. If you carry department store cards and other bank credit cards, it can be easier to use them – “I’ll just use it this once and pay it off soon” – usually it is something you may not need and it’s easy to say you will pay it off, but will you? If you have cash to pay for it, great, but if not, it may not be the right time to buy – remember you are trying to save for a home.
These are a few tips on ways to save money for your down payment. How much you need to save depends on your situation. You can meet with a loan officer to get an idea of how much you need. There are programs available to help you with your down payment but you do need some of your own money with most programs. It’s also nice to have some extra money in your savings account when you buy for unexpected expenses. Once you are ready to buy, contact your loan officer and discuss your mortgage options.