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Was your New Year's resolution to save up for your first home? Buying your first house is a huge achievement, and part of that is the financial commitment. When you are ready to submit a sales contract to purchase a home, you must include an earnest money deposit. Once the contract ratifies and in many cases in order to settle on the home, you must have the down payment. That down payment needs to be somewhere between 5% and 20% of the total home's sale price, which means thousands of dollars saved for a nice home.
The good news is that starting that savings account is the hardest part. Once you have a few sources of seed money and practice saving, your down payment will hove ever closer into reach. Today, we're here to help by sharing a few great ways to save for a home in the new year.
Open a Dedicated Savings Account
Start by opening a savings account just for buying your home. Separating your savings is the best way to prioritize them. In fact, if you have multiple savings goals, separate savings accounts can help you to keep those goals in sight.
Starting an account for the house will help you count up to that big goal number and maybe beyond. This also saves you from confusing your savings with your discretionary spending.
Use Your Tax Return as Seed Money
When you get your tax return this year, it's like non-income money. Instead of spending it celebrating the New Year, respect your resolution and save it in the house account.
Use your tax return as inspiration, and invest it like seed money.
Make Saving Your Default Mode
One of the best ways to save quickly is to make saving something you do with every breath and motion. Always be looking for ways to save money, without becoming uptight or worried about it. Look at life as a game where saving money is something you can win. Plan a staycation this Valentine's and put the money saved on travel into the home fund. Or buy coupon and store-brand groceries then pocket the few dollars savings into the house account.
Saving at every turn will make a surprising difference. Not only will you create a trickle into the savings account, but you will start seeing savings as an opportunity instead of "missing out" on spending.
Teach Yourself to Cook
Speaking of savings every day, learn to cook at home. The less you eat at restaurants or pick up ready-made food, the more you'll save. Raw ingredients are inexpensive and so is eating at home. Whether you live alone, with a partner, or with family, you can save hundreds every month by switching to home-made lunches and dinners at home instead of eating out or instant.
As a bonus tip: Figure out your pantry staples and get creative. The more you can do with stockpiled ingredients, the more you can save for the house.
Prune Your Subscriptions
We all have a few dozen (or a few hundred) subscriptions. Some are free, some are paid, but we tend to collect subscriptions without keeping track of how many we have that are currently active. Check your financial statements and hunt down every paid subscription that's been automatically making deductions each month.
How many of those services are you still using? How many could you easily do without? By pruning your subscriptions, you can get up to a few hundred dollars each month for savings.
Use a Change Jar
Part of getting into the habit of saving is physical change. If you use cash in your routine, get into the habit of setting aside your change and spare bills. Make a household change jar and start saving up that way as well. You might use family games like "promise jar" and "curse jar" rules to encourage everyone to drop their spare change.
You might be surprised how much you can get from a coin machine at the end of the year to add to your savings.
Hold a Garage (or eBay) Sale
There's the classic garage sale with a modern twist. Most households have more than a few things that you could do without. Old clothes, kitchen appliances you never use, and possessions you haven't unpacked in years can all be sold to seed your home buying funds. Pull out your best sale items, like bread machines and workout equipment, to sell for top-dollar on ebay. Large-stock inventory like boxes of clothes and knick-knacks may sell better in a fun public garage sale.
Put Off New Purchases
Lastly, use a mental trick to prevent yourself from spending money that could be saved for your house. Any time you're about to buy something new that isn't essential or groceries, stop. Wait for an entire day or even an entire week before finalizing that purchase. Do you really need it? Will you use it? Could you do well enough without it?
Every time you convince yourself not to buy a non-essential item, put the money you didn't spend into your savings. That'll pile up surprisingly fast and it'll feel good every time you save.
Here at First Savings Mortgage, we want to help you buy your first home. The beginning of that journey is saving up enough for down payment, earnest money, and the closing costs of your future home purchase. If you are planning to buy a home, contact us to speak to a local expert Loan Officer and understand if it's the right time for you to buy or prepare for that future purchase. Let us help you become a homeowner.