The Savings Game: How To Inch Closer To That Down Payment Without Getting a Raise
Do you dream of buying a home but struggle to accrue enough savings for a down payment? If so, you’re not alone. 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.
First, if you’re not doing so already, begin 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.
Next, make 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.
Next, comb through your monthly spending habits to learn where you can trim the fat in your budget. If you have an expensive coffee habit, 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 incrementally for a big-ticket item is never easy, but with patience, motivation and follow-through, you can set yourself up for savings success.
Image via Flickr/chrispotter