Resolve to Save For Your Down Payment In The New Year

These days, many Americans dream of buying a home but find themselves feeling overwhelmed or defeated by the struggle to save enough for a down payment. Under current economic conditions, the days of a 20 percent down payment are long gone, and many Americans struggle to save even 5 percent of their dream home’s purchase price. Many find themselves waiting for the next big raise before committing to a savings plan, but with patience and practice, you can turn your dream into reality by making simple adjustments in your monthly budget that will free up extra cash in the present. And what better time to begin than in the New year?

How To Save for a Down Payment

  1. You’ll want to start with the integral step of tracking your monthly expenses. You can use a simple Excel spreadsheet, or one of dozens of free apps available for your smartphone. This will give you a baseline for your spending – and you may be surprised to see where all your money is really going.
  2. Next, simplify things by making your savings automatic. You can ask your employer to deposit a portion of your paycheck directly into a high-yield savings account, or you can choose to set up set an automatic transfer from your checking account into your savings. Experts recommend carving out your savings at the beginning of the month so you won’t give yourself a chance to spend it as the days tick by.
  3. Finally, examine your monthly spending habits with a fine-toothed comb to learn where you can trim unnecessary expenditures in your budget. If you have an expensive coffee habit, for example, challenge yourself to brew at home at least three days per week. If you buy lunch every day at work, consider packing instead. Look for ways to save on gas by consolidating your errands, carpooling, or taking public transportation. Every dollar you save on these expenses can go directly into your savings account.

Saving for a big-ticket purchase like a home is always challenging. A little patience, motivation and follow-through, however, can help you win at the savings game.

Image via Flickr/kenteegardin