Most people don’t just have thousands of dollars at their disposal so getting the funds for a down payment can be pretty tough. Some people are lucky enough to have parents or family that can help, but most of us have to do it the good old-fashioned way; SAVING.
Saving money can seem like a daunting task, especially when life can be so expensive. However, there are small changes you can make that will give a significant impact on the amount of money you save. That’s why we’ve come up with some ideas that can help you increase your savings.
1. Savings Account:
Transfer a fixed amount of money each month in a savings account by setting up an automatic withdrawal. Having the money withdrawn automatically will prevent you from spending it and will make it easier for you to save since you don’t physically see the money. Other than for your down payment, commit yourself to not use these funds.
2. Skip Vacations:
As much as vacations are nice, try not to go on any for a whole year. The money you would have spent on those vacations would make a significant contribution towards your down payment. There will be plenty of opportunities for you to go on vacation again, but you could miss out on your dream home by not having the funds available to you when needed.
3. Lower Expenses:
Go through your monthly expenses and look for ways you can reduce the amount you spend or eliminate it altogether. Cook at home in favor of going out. Put a sweater on and turn down the heat a little. Eliminate unnecessary reoccurring costs such as paying for extra TV stations you don’t watch. Make coffee at home instead of picking one up on the way.
There’s lots of little things you can do that can save you a fair amount of money. Try to give yourself a lower budget on things you enjoy doing and calculate the difference of what you used to spend, seeing how much you can save might make it easier.
Learn How To Budget
4. Lower High Interest Rate Debt:
Credit cards typically have high interest rates, which can tremendously impact the amount of money you can save. Start by paying off your highest interest rate credit card first. Once paid off close the card and move on to the next one. At the very least you should transfer your credit card balances to the card with the lowest interest rate. This will help you save tons of money spent on interest each month and once all cards are paid off you can put the money you were paying towards your down payment.
5. Sell Some Investments:
Selling some of your investments may sound a bit daunting but look at this way, you’re shuffling some of your current investments into another investment, your home. You accrue equity in your home as you make payments on your mortgage and as your home’s value increases so does your investment. Typically, a house in a good neighbourhood with proper upkeep will increase its value throughout the years, giving you a good return on your investment.
6. Get a Second Job:
If you have spare time on your hands think about temporarily getting a second part-time job. Do something non-stressful that you enjoy so it doesn’t feel like you’re always “working.” Putting these extra earnings towards your down payment can make a tremendous difference and could get you into your own home quicker.
Say no to those beautiful pairs of shoes you saw at the mall, hold off on buying that sports car you’ve always wanted. When it comes to saving for something as big as a house, priorities must be kept in check. Keep telling yourself it will be all worth it in the end and you can treat yourself again eventually. Focusing solely on why you’re saving and how important owning a home is to you will make it easier for you to say no to spending money.
8. Get Rid of Your Second Car:
Consider getting rid of one of your cars if you’re living with a partner. It can save you thousands of dollars per year on gas, car payments, insurance, maintenance, etc. Instead try carpooling together or walking on nice days. Even the use of public transportation is cheaper than owning a car by a whopping 80%, which is a significant amount of money that you could be putting towards your down payment instead.
9. Borrow from Your RRSP:
When buying your first home in Canada, you can withdraw up to $25,000 from your RRSP if you have one. If you don’t have an RRSP this is a good way to start saving towards an RRSP and get a tax credit to help lower your taxes. The only drawback is you have to pay the money back within 15 years, otherwise it will be treated as income and you will have to pay taxes on the amount you withdrew. It’s best to discuss this option with your financial advisor to see if it’s right for you.
10.Move Back Home:
As much as you may think moving back home with your parents is your worst nightmare come to life, think about all the money you could save. Explain to your parents that you’re trying to plan for the future and that that you won’t be there forever. They’ll probably charge you a lot less than you would be paying for rent, allowing you to save more towards your down payment.
11.Get a Smaller Apartment:
Normally a bigger apartment with multiple bedrooms will cost you more in rent. Try going down to a one bedroom or even a bachelor apartment. Yes, you’ll have to give up extra space but think of the difference in rent you’ll be paying and remind yourself why you’re doing this in the first place. All the extra money you were spending for a bigger apartment can now go towards your down payment.
Top 7 Benefits Of Downsizing
Do you have extra items just kicking around or collecting dust? Go through your stuff and take a look at what you could possibly sell. Someone’s junk is someone else’s treasure, you may not think it’s worth something but someone else could. Put whatever money you make from the sales aside for your down payment.
Kijiji and Facebook Marketplace are great places to list unwanted items for sale.
There certainly are lots of ways you can save money if you just stop and think about what it is you spend most of your money on. Once you’ve figured that out, you can start making changes to your budget. Most of us live comfortable lifestyles so making these changes won’t be easy, but stick to the plan and remember that this will be all worth it in the end when you have the keys to your new home.
Do you have any other money saving tips you would like to share?