6 Creative Ways to Save for Your Down Payment
Homeownership is the ultimate dream for most Canadians, but the multi-year ordeal of scrimping and saving for a down payment can feel like a nightmare. Although saving for a down payment is a necessary evil, there are plenty of ways to speed up the process and make saving fun.
I’ve been saving for a home for the past six months; here are six techniques that have helped me save thousands of dollars:
- Trim your budget
“A penny saved is a penny earned” isn’t just a cute statement. The first and simplest step to save for your down payment is to hack your budget down to bare bones. Go through every line of your budget, from rent and utilities to entertainment and clothing, and look for opportunities to save money. Be ruthless and cut costs wherever possible.
When looking at your fixed expenses, make sure to ask yourself if you’ve done everything you can to reduce your costs. Here are several examples of how to lower your fixed expenses:
- Eliminate your cable subscription
- Switch to a cheaper cell phone plan
- Ask your insurance company for a better rate
- Relocate to lower your rent
You can also reduce your variable expenses like entertainment and grocery spending. Start with an easy target, like lowering your grocery spending by $20 per week, and go from there.
And don’t think of these savings as extra spending cash. Whatever savings you reap, make sure to funnel them right into your down payment.
- Make more money
Now that you’ve trimmed your budget, it’s time to increase your income. The easiest way to start making more money is to maximize your income from your full-time job. Ask for a raise or work extra shifts. If you’ve already exhausted these options, it’s time to monetize your skills through side-hustling. Depending on your primary field, here are some examples of profitable side jobs:
- Graphic/web design
- Consulting
- Bartending
- Translation
- Freelance writing
- Dog walking
- Landscaping
- Tutoring
Once you’ve earned your extra cash, don’t think about spending it! Deposit it directly into your savings.
- Use windfall money
Windfall money is money you weren’t expecting or that you haven’t accounted for in your budget. Examples include annual bonuses, credit card cash back rewards, and income tax returns. While you may be tempted to treat yourself to something special with this money, consider using it to boost your down payment. Large deposits are a great way to see your account balance soar and keep up your enthusiasm for the task at hand. When the time comes to buy your home, you’ll be happy you saved that money.
- Adopt money-saving hobbies
Hobbies are a great way to find fulfillment outside of work and family! Rather than shopping, going out for dinner, or other more expensive hobbies, try incorporating a pastime or learning a skill like the ones listed below:
- Vegetable gardening
- Car maintenance and detailing
- Baking
- Web development
- Sewing
- Pet grooming
Not only can many hobbies save you from spending money, building a new skill or upon your current skills can help with personal and career development, (meaning win-win!).
- Tell friends and family
Never underestimate the generosity of family members. Becoming a homeowner is something relatives understand, and most are happy to contribute to your cause. Instead of straight-up asking for cash, you should suggest cash gifts instead of holiday or birthday gifts. If you’re engaged, let people know you’re saving for a home and that cash is a perfectly acceptable wedding gift.
- Set manageable goals
Saving money for a down payment on a home is a big undertaking. It can often take years, and keeping your up enthusiasm during this marathon saving session will be tough. To help you stay on track, try breaking your saving goals down into manageable chunks by year or by month. When you hit your goal, treat yourself to a free reward like a hike or a new library book.
If you set goals and stick to them, before you know it you’ll have a sizeable down payment saved. Then all you’ll need is mortgage preapproval from a mortgage broker and you’ll be ready to start house hunting!
Flickr: Jessica Merz