Unfortunately for many of us, the thought of saving for a down payment to purchase our first home can seem a bit daunting and can often delay our purchasing decision. While coming up with a full 20 percent down payment isn’t necessarily required, it’s often the optimal choice so you can avoid paying private mortgage insurance on top of your mortgage. Still, most of us still do long for homeownership and the freedom and pride it can represent. Saving for a down payment is certainly not an easy feat, but with some creative savings plans, you can save for a down payment faster than you think!
Here are ten ways to save for a down payment fast!
1. Save your spare change
If you still use cash, even if it’s only every now and again, keep a change jar and toss in your extra coins. It may not seem like much, but the goal is to save a large amount in small steps. Over time, the money does add up and you can watch your savings grow. When you go to turn in your coins, first call up your bank’s local branch and see if they have a free coin-counting service. If they do, great! You can turn in your coins and deposit into a savings account immediately in one trip. Some banks do charge for the service and/or are removing coin counting services from their branches altogether. Still, check with your branch first so you can avoid the high fees of third party coin counters like Coinstar.
2. Find more affordable alternatives
Cut your cable and get a Hulu or Netflix account instead. Ditch the gym membership and work out at home or outside. Get a coffee maker instead of going to the shop every day. Take a sincere look at all your expenditures and see if there are ways you can cut back on some of costs. You might find there are cheaper alternatives to many of your current expenses. Often times we find we’re not taking full advantage of the things we pay for anyway, so it might be best to make a few small changes for bigger savings. Those small changes can make a big difference.
3. Cut back on the extras
Beyond just finding alternatives to your current expenses, consider cutting out some expenses altogether. Maybe you’re paying for a subscription you don’t ever use. Cancel it. Maybe you eat out too much. Start cooking and eating at home.
Get rid of the luxury spending and you’ll find that those costs will become savings instead.
>> Read our article on 10 Worst Things to Spend Your Money on in Your 20s
4. Sell your old stuff
Over time, many of us end up somehow just accumulating… stuff. We might not notice it, and some of us may even try to actively avoid it, but it just happens over time. Go through all that stuff and see if you can unload it. That old flat screen TV you had since college that you’ve since replaced with a newer model? Get rid of it if you don’t use it. If you have enough items of value, consider having a rummage sale. Maybe ask a few neighbors or fellow apartment mates to hold one together. Or utilize online channels such as eBay or Craigslist.
If you feel you can’t sell it yourself, or can’t be bothered with selling it yourself, donate your still good, useable items to a local charity and file the cost during tax season. You’ll get the extra cash you need.
5. Make money off your hobbies
If you have a unique talent, there may be a way to make a small profit off it in your spare time. Find the niche audience that may be interested in your work and there might be a crowd also willing to pay for your skills. If you’re a crafty DIYer, consider taking your talents to local markets or set up your own e-shop. Sites like Etsy can also be a great community to make cash selling your projects.
Travel to thrift stores and yard sales and buy old furniture for cheap. Then repaint, restore, or distress them yourself to resell pieces for a profit. Consider tutoring if you’re exceptional at a certain subject. If you’re a decent writer, maybe you can freelance and write for businesses. If you’re musically inclined, play some tunes on a corner over the weekend.
There are a number of ways you can monetize your talent.
6. Work more
One of the best ways to save more money is to make more money. And that means putting in the effort to make it. Maybe you have a part-time job. See if you can take another. Or maybe you already work full-time. See if you can make time to get something part-time after your normal work hours or on weekends. You could do contract work or provide freelance work and make some extra cash.
Don’t feel that some work is beneath you. Grabbing an extra retail job in addition to your professional career is still extra money in the bank. Plus, if you work at a place you frequent and get an employee discount, you can save more money on the things you buy normally anyway!
7. Make money on your money
Basic savings accounts are unfortunately not a great way to actually save more money. You should still have one and keep enough cash on hand for at least 3-6 months of expenditures in case of an emergency, but in the bigger picture, money in a savings account is untapped potential. Once you have enough extra cash, consider investing in other options such as a high-yield savings account, money market account, or even stock.
There, of course, is always a risk associated with investing and you could lose money, but you can also potentially quickly grow your money for very little work. It’s better than keeping you money in a savings account where the interest rate is typically really low. In fact, it’s probably lower than annual inflation, so you may even be losing money!
Do your research, diversify your investments, and seek advice from a professional who can guide you on your investment options and inform you of any risks.
8. Get a gift
If you have some generous family members, maybe they can help you with your down payment savings goals. It does happen and in fact there are many people today who get assistance from their folks or family for just their rent.
Of course this won’t apply to everyone, and for some it might leave a poor taste in the mouth to ask for financial help. Still, it might be a good idea to at least start asking for cash over birthdays and holidays instead of specific goods. That way you can save that money towards your much bigger goal instead of something else that may only yield temporary satisfaction.
9. Don’t invest heavily in your current home
If you’re currently renting, maybe you can consider downsizing your apartment or renting in a more affordable area. Sure, it’s great to live in the hip area where there are lots of activities, but those lifestyle choices are really wants, not needs. If you can shave off a couple hundred dollars a month from your current housing, you can save a lot faster towards moving into your own home. Really, if you want to be in the area where it’s cool, move a little further away and just drive. The transportation costs may be less than your rental savings.
Also, don’t invest too heavily in decorating your space now. It’s a temporary space. If you buy a bunch of furniture and decorations now you’ll have to move all that to your new place. And that can get costly. Things could get broken.
Wait until you have your own permanent place and decorate that as you see fit. Often when we move, we might want change our home’s style up or find that certain old furniture might fit differently or doesn’t work in the new space. Hold off on those expenditures.
10. Maximize your rewards on everything
Rewards programs are one of the easiest ways you can save money for literally no work and no changes to your lifestyle. Many retailers offer discounts, purchase points, or send you coupons for simply signing up for the membership rewards programs and spending. Take advantage of these for things you would buy anyway! You can actually get great coupons and offers. If you really don’t want the messages in your primary inbox, create a spare email account dedicated to just rewards.
Also, ditch the debit card. Credit cards are not only more secure, but also help build your credit and offer cash back rewards for your spending. If you bank with your cards provider, they may even offer you a bonus on top of your cash back. For example if you bank with Bank of America, and use the BankAmericard Cash Rewards™ Credit Card, they will give you an additional 10% of your racked up credit card rewards if you deposit the cash back to one of your Bank of America savings or checking accounts.
Other credit cards such as the Capital One® Quicksilver® Card, Citi Double Cash Card, or Discover it® Chrome card, all offer excellent cash back amounts for everyday purchases.
Obviously you still want to use your credit cards responsibly, but by combining rewards programs with your cash rewards credit cards, you can literally save money twice on one purchase. That’s an easy, quick way to save towards a down payment!
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