6 Tips for Saving Toward Your Down Payment
Saving for your down payment can be challenging, especially if you’re already on a tight budget like most of us are. But minor adjustments can add up to big savings.
These 6 tips can get you started in the right direction:
1. Coffee and Meal Prep
We mean well when it comes to food and coffee costs, but those expenses can sneak up on us easily. We mean to pack lunch but there’s no time. We get stuck in a late meeting and grab something on the way home. A hectic day requires a decent coffee to get through it—and that becomes a habit fast. These costs can easily add up to thousands of dollars each year.
Planning ahead can get you back on track here. Try planning out a weekly menu on the weekend—or even cooking and packaging a few days’ of lunches on Sunday. And plan ahead for when Plan A doesn’t work: Stash a few cans of soup or tuna salad kits in your desk drawer and an apple or bag of salad in the work refrigerator. (Just remember to eat it or take it home by Friday!)
2. Organize and Track All Your Expenses
For one month, determine exactly where your money goes by keeping track of every single item or service you purchase over 30 days. Review your credit card and bank statements to categorize where you spend each dollar. Then examine it to see what you can eliminate and save towards your down payment.
3. Set personal goals for saving
After step 2, use a budget to set monthly and yearly savings goals. By determining your necessary expenses and cutting back from extras, you should be able to plan for allocation of savings each month. This doesn’t mean completely avoid entertainment and excursions but rather cap and plan for them so you save and have fun.
4. Open a “Rainy Day” Savings Account
With all these new savings, it’s best to open a separate account and as you pay out your bills, pay yourself first with the funds you save. Over time, this money will accumulate and provide a nice nest towards your down payment. Remember, pay yourself first!
5. Make Smart Choices
Carpooling, drinking tap water, and quitting smoking not only help the environment and your healthbut they also help your pocketbook. The money you save from these changes can add up and before you know it, add even more towards your down payment.
6. Save and Maximize Your Tax Refund
More than 150 million tax returns will be filed next year, estimated by the IRS. That’s a great nest egg to put towards your down payment and savings.
These are just some easy tips and best practices from our Guidance family to yours.