If you’re like most people, saving up 20 percent of a home’s value for a down payment is no easy feat — but what can you do so you can finally move into a home of your own?
How to Save Up for a Down Payment
Saving money isn’t easy… especially when you’re talking about a figure that can range into the tens of thousands of dollars.
So what can you do?
First, look at the big picture: penny-pinching might be a good idea, but figure out where you can cut out big expenses first. Naturally, you’ll want to avoid making major purchases while you’re saving up money for a down payment. Could you hold off on a new car until after you’ve bought your home? Can you move into a smaller apartment if it means you’ll pay less in rent? Ask yourself where you can save hundreds each month, and see if it’s feasible to do so (and if it is, put that savings toward your down payment).
Keep your down payment savings “quarantined” from your other money. Put it in a separate account, and vow not to touch it except in extreme emergencies. That way, you’ll always know how much more you need to save — and it won’t disappear into the rest of your bank account.
If you come upon an unexpected windfall, stash it away. This could be your tax return, an inheritance, or any other money you weren’t counting on to pay your bills.
Finally, commit to setting aside a certain portion of each paycheck for your down payment fund. It doesn’t have to be big (but the smaller it is, the longer it will take you to save). Start with 10 percent and adjust from there based on how much the change impacts your daily financing.
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