Saving for a down payment can be a struggle, follow these guidelines to help save effectively & efficiently!
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Prioritize
Do you really want to buy a home? If you were hesitant with your answer, don’t take these tips to heart. If you answered yes faster than you have ever answered yes before, keep reading and keep saving for your down payment!
Prioritizing saving for a home is important because the more you want it, the easier and more exciting it will be to save. Every time you’re about to purchase something you don’t necessarily need, ask yourself “Do I want this more than I want a house?” A lot of the time that is enough to put your shopping crave to an end.
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The Account that shall not be named
Get an account that is separate from your everyday bank’s chequing’s and savings account. Whether it’s a TFSA (tax free savings account) or RRSP (Registered Retirement Savings Account) or another regular savings account, the key factor is that it is not associated to your everyday bank. Choose a bank that doesn’t have a branch near by & you can’t easily transfer money from. My go to is Tangerine bank (no banking fees!) Transfer from your every day accounts bi-weekly or monthly and put it in that account and just watch it grow. You’ll have a down payment in no time.
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Extra, Extra, Income
Tax refund money, work bonuses, birthday money, holiday money, ‘grandma just visited and gave me money’, money- all this extra cash that you’re receiving, put it straight into your new untouchable account!
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Identify Where your money is going
Do you find you’re living pay cheque to pay cheque and you’re confused about where the majority of your income is going? Don’t worry, that’s normal, and I am going to introduce you to an app that may change your life! Do yourself (and your savings) a favour and get the Mint app. Use this app and discover where your money is going and help determine your budget, improve credit and save money!
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BONUS: Buying as a couple? Why not live on half the income?
This isn’t an option for everyone, but if you can make it work you will be in your first home in no time! Calculate all combined expenses (rent, groceries, gas, EVERYTHING). Determine if yours or your partner’s monthly income could cover 100% of the monthly expenses. If one of you can with a few dimes to spare, why not solely live off that income and put the other income in savings? This is challenging for several reasons. If you’re living a cushy life style, going to dinners, movies, shopping every pay, it’s going to be a major adjustment on both parties.
For the individual’s income who will be used for expenses: It is going to feel like you are working so hard just to watch your money vanish into the payments, no money to spare on yourself.
For the income that goes directly to savings: This can make you feel as if you’re absolutely broke, plus, if you’re like me you and you have a hard time asking for money, it’s going to be tough on your ego.
To the both of you, you won’t feel this way forever, and it will be worth it in the end when you’re living in your first home.