How to Plan to Save for a Down Payment
Taking the step to buy a home of your own is a very exciting and rewarding experience! Getting to the point of being able to do this can be extremely difficult though and saving for a down payment for a house can seem extremely impossible at times.
Here are 6 ways you can save for a down payment!
1. Understand what you are aiming to buy and set an actual savings plan!
If realistically you want to own a home in a year and feasibly you can only afford 5% Down Payment of a $300,000 House, make a plan to save exactly $15,000. Be aware and do your research! Setting an actual financial target is the key to any successful savings plan!
2. Lower your debt load
Nowadays, many people start their career with a fair amount of debt due to their school loans. When the banks look at your debt load they like to see it below 70% utilization (Minimum total debt paid off by 30%) Shoot for this!
3. Cut out expensive hobbies!
Everyone deserves to have a hobby and enjoy their free time, but some of us end up spending a lot of money while doing this. Here are some hobbies you can pick and enjoy for little to no money!
· Instead of spending 20$ Per Yoga Class go to the 5$ Karma or Community Classes! Be realistic about what you are spending for your free time and cut out what you can! If you're doing 1 class a week that's $15 a week savings which is $780 PER Year!
· Books can be expensive, but going to the library isn’t! If you love to read, go to your local library and check out something you enjoy!
· Volunteering! If you find yourself always going to the mall or going out to eat, try volunteering and helping a cause you support! Nothing feels better than knowing you’ve benefitted somebody else’s life.
4. Savings Plan & Savings Account!
Set up an automatic savings plan! Even if you are putting away $200 per pay cheque it all adds up! Budget in accordance to what you can realistically afford to save per month to get to your goal! Here are a few savings account tips:
· Tax-Free Savings Accounts (TFSAs) are great ways to save for the purchase of a new home. Not only will your money grow tax-free, but you also won't pay taxes on withdrawals you make.
· Under the Home Buyer’s Plan, first time home buyers can withdraw up $25000 from their Registered Retirement Saving Plan (RRSP) to use towards the down payment.
5. Cutting back on restaurants and bars:
The newest generation has been proven in studies to have a habit of going out for food and drinks very regularly. This is an extremely expensive habit that people who are looking to buy a home cant have! Rather than going out to eat, try hitting the grocery store and whipping something up at home with a complimenting cocktail or two with your friends! The average savings per year by doing this just once a week is $2,500.00!
6. Create a monthly budget
Lastly, the only way to build savings is by spending less than you earn. Therefore, any financial goals begin and end with your personal monthly budget. It's important to be both honest and realistic about your spending habits out of the gate, and then stick with your fixed plan as much as possible.
Print out your budget and go from there! Be Honest with yourself about how much you are spending... cut out what you don't need! Instead of spending $5.00 a day at Starbucks buy a to-go mug and make your coffee at home! Simple Savings alone of $150.00 PER Month!
Saving for a down payment can be a little tricky and is a lengthy process, but if you are able to put the work in and stick to achieving goals, it’s definitely something that can be achieved!
Make Your Approach~The Fresh Approach!
The Fresh Approach Real Estate Team with Keller Williams Realty Solutions,
Allana Thompson, Christy D'Oliveira, Kyrsten Feere
Allana- 416-567-2018 firstname.lastname@example.org
Christy- 647-261-8910 email@example.com
Kyrsten- 905-577-2608 firstname.lastname@example.org