13 Simple Methods to Save for a House

Want to leave your apartment (or your parents') but are unsure of how to start saving for a home? Although saving money is difficult, it is possible with the correct tools and techniques. Here are 13 easy ways you may start saving for a house right away, from automating your money to beginning a side business.

Saving Money for a House

1. Open a savings account online.

Thankfully, opening a savings account no longer requires going into a physical bank. Many banks today provide online savings accounts that consumers can open whenever and wherever they like.Aside from being practical, creating an online savings account could increase the compound interest you receive on your deposits. Online savings accounts are continuing to boost their rates, making it easier for customers to earn reliable compound interest on their savings deposits while physical banks continue to provide low rates (think: only 0.01% APY).

2. Automatically save money

Make sure to automate your savings account on a monthly basis when you set it up. This will prevent you from being tempted to spend your income elsewhere by automatically depositing a portion of it into your savings account. We promise that this tiny change will have a significant impact on your savings and help you resist the temptation to spend money on frivolous things.

3. Reduce "little" luxuries.

You wouldn't believe how much those tiny indulgences add up. So it's time to stop buying that daily Starbucks coffee and those expensive restaurant meals. Other minor indulgences that are simple to put off for a while include impulse purchases, cable TV, magazine subscriptions, pricey books, massages, manicures, meal delivery services, haircuts, clothing, and any other costs that can be covered by other sources of income.

4. Set up a budget.

You won't be able to save up enough money for a down payment if you don't have a sensible and realistic budget. Thankfully, setting up a monthly budget is simpler than it seems. To begin, we advise carefully examining the monthly inflow and outflow of your bank account. Alternatively put: your income minus your expenses. Keep track of recurrent, fixed expenses like rent, utilities, auto payments, and other bills after canceling those tiny luxuries (such as magazine subscriptions, meal delivery services, etc.). Decide how much you need to put into your savings account each month and how much you can afford to do so. Next, determine how much money you have left over to spend on other things like food and groceries. Once you've created a reasonable budget, you should be able to start saving right away.

5. Save any year-end bonuses or tax returns.

Don't buy clothing or eat out with that sizable tax refund or year-end bonus if you're saving for a house. Instead, make a quick transaction into your savings account. This is a simple approach to increase your savings right away and shorten the time it takes to buy a home.

6. Put a stop to (or cancel) your gym membership.

For many people, a monthly gym membership is an expense they can go without (at least temporarily). So, to avoid paying exorbitant monthly membership costs while you save for a property, put your membership on hold or cancel it. Instead, attend free classes, go for walks outside, or use free fitness apps.

7. Taking on more work

By bringing in more money each month, you may save money more quickly. If you already work a regular 9 to 5 job, we advise launching the side business you've been thinking about. Freelance writing, dog walking, tutoring, selling artwork, and driving an Uber or Lyft are a few examples of supplemental income-generating activities. Start honing new talents and cleaning up your old résumé if you decide to branch out and look for a new position altogether.

8. Utilize Mint to keep tabs on your expenditures and expenses.

Make a Mint account now, if you haven't already. Managing your finances and keeping track of costs is now simpler than ever thanks to our free personal finance tool. Bills, costs, and income will all be seen in one location. Mint streamlines the creation and maintenance of budgets by gathering all of your financial information in one place.

9. To get out of debt, pay down your credit cards.

Paying off any outstanding debt you already have is just as crucial as setting aside money to save for a down payment on a home. The cause? You'll need a decent credit score if you want to use credit to buy a house. Without it, finding banks willing to lend you money for the house will be difficult. Even if you are successful in finding a mortgage lender, your interest rate will undoubtedly be extremely expensive. Paying off your debt (especially on high-interest credit cards) and continuing to make the minimum payments are two of the best strategies to raise your credit score.

10. Don't go on vacation.

Vacation travel may be both expensive and very rewarding. The typical vacation costs $1,145 per person, or $4,580 for a family of four, according to one survey. Consider shorter, local getaways or take advantage of a staycation right where you are instead of traveling out of town or across the nation. Save that cash for your down payment and use it to explore your neighborhood museums, visit a nearby historical site or nature reserve, go on a scenic trek, organize a do-it-yourself spa day at home, or enroll in a local culinary or art class. If you feel the desire to leave the house, consider making plans to visit a friend who lives nearby and will be willing to put you up for a few days. Booking a weekend stay at a nearby hotel is another fantastic small staycation option. (Additional bonus if there is a pool.)

11. Locate a roommate

Rent being paid only by you? In order to cut your monthly rent payment in half, try to find a temporary roommate. Most likely, your greatest regular expense is your rent payment. Having a roommate might significantly reduce your expenses. With the new roommate, you can also divide expenses for things like toilet paper and paper towels as well as utilities.

12. Examine cutting back.

Moving to a smaller apartment, to a more cheap region, or selling your car (if you can swing it or have an extra one you can do without) are some more options to lower your costs. You could prefer a simpler way of life, and you have the significant purchase of a new home to look forward to.

13. Your parking spot or extra room can be rented.

Consider listing your spare bedroom on a vacation rental service like Airbnb or Vrbo if you happen to have one. You'll be in charge of who leases it and when, and you'll earn some extra money in the interim. Similar to this, you can use an app like JustPark if you have a parking space you can rent out. Renting out your desired parking place might be a terrific way to make additional money if you live in a densely populated area or close to, say, a festival or a site for a sporting event.

More fast advice on saving for a house

• Request a raise
• To avoid buying books, request a library card.
• Apply coupons
• Utilize special offers and discounts at neighborhood restaurants.
• Improve your credit score by working hard.
• Use mobile apps to save money
• Have a family member or friend hold you accountable.
• Request cash in lieu of material gifts for your wedding, birthday, or other special occasion from family and friends.

How much should you set aside to purchase a home?

You should typically have enough money to pay the down payment, closing costs, and moving expenses. The precise sum is determined by the cost of the home and your willingness to make a down payment. Additionally, you might need to perform a few urgent repairs (roof, plumbing, electric, etc.) before moving into your new home. You must take those into account unless the prior owner is paying them.

The brief breakdown is as follows:

• The initial payment. It can be anywhere from 0% and 20%, however buyers using traditional loans must put down a minimum of 3%–5%. The idea of the mandatory 20% down payment is untrue. Depending on your salary and credit score, several lenders have requirements lower than that. Check to see whether you are eligible for a Department of Veterans Affairs (VA) or U.S. Department of Agriculture (USDA) loan or if your state has a first-time homebuyer incentive program.
• Closing expenses. They make up between 3% and 6% of the entire loan amount. So, if you take out a $200,000 mortgage, you should anticipate an increase in closing fees of between $6,000 and $12,000. These are not included in your down payment and are frequently negotiable.
• Moving costs. Local moves can cost as little as $501 for a studio apartment and as much as $2,988 for a home with four to five bedrooms, depending on the size of your house and the amount of belongings you need to move. Depending on the distance you're moving and the amount of your relocation, the cost of a long-distance move might range from $1,123 to more than $14,107. (You can use our Moving Cost Calculator to obtain a rough idea of the cost of your move.)

How to create a better budget in steps

Budgeting for a home purchase is one of the first and most important tasks in saving for a home, as we said above. A straightforward breakdown is as follows:

• Make a monthly income calculation. This might be your take-home salary, the income of your spouse or partner, and any other income you may have (for instance, royalties or money from renting out your own property).
• Determine your current outgoings. Include all of your regular monthly expenses, such as rent, food, utilities, credit card, student loan, and auto insurance payments. Then calculate how much you spend each month on luxuries like dining out, impulsive purchases, streaming services, and so on.
• Determine where you can make cuts. Make a list of the things you can live without, even for a little while, then follow it. You may give up going out to eat for a few months, pause your Netflix subscription, or give up anything else for a period.
• Determine how much you can put aside each month. Set a monthly contribution that is manageable for the down payment and see it as a necessary expense.

Conclusion

There are many ways to save money for a house, but you must have a strategy. Make a budget and stick to it to start. Think about strategies to boost your income while decreasing your expenses. Even better if you already know how much you need for a down payment. Otherwise, simply be aware that it might range from 3% to 20%, depending on the sort of loan you have.