One of the most daunting things about buying a home can be saving up enough money for a down payment and closing costs – especially if you want to put enough down on the home to avoid paying PMI. If you’re renting, you might not think you have the budget flexibility to save to buy a home.
Help! How can I save to buy a home when I’m stuck paying rent?
You may be asking yourself, “how can I save to buy a home while I have to pay rent at the same time?” While you might be able to save a little here and there, your nest egg might not be adding up as quickly as you hoped. This is a very typical question people have and will be addressed in these seven ways to save to buy a home while you’re still stuck paying rent.
Save to Buy a Home While You’re Still Paying Rent with 7 Strategies
Create a budget spreadsheet, or use a budget app
If you don’t know where your money is going, now is the time to find out! You can’t control your rent expense but when you need to save to buy a home, you have to identify those expenses you can control.
Create a budget and then stick to it. Start with what your goal amount is to save and work backwards from there. List your current payments, and then list what you typically spend per week for groceries, social events, gym memberships, etc.
You’ll see how your monthly expenses add up and it will also help you visualize areas where you have the ability to trim disposable spending. If you can’t think of all the ways you spend money per month, check out your bank and credit card statements.
Minimize dining out
Going out to eat can cost a lot, especially if you do it multiple times a week. If you need to save to buy a home, avoiding dining out can help you reach your goal more quickly.
Meal plan your week and go grocery shopping often enough (keep your food goods stocked) so that you aren’t tempted to deviate. As far as going out to bars and clubs, it’s very easy to spend up to and over a hundred of dollars a night. Cut back the frequency you go out to play. Every time you spend money, really think about if you need to spend it or if you’d rather see that money be saved for your house.
Find alternate workouts
Gym memberships and fees can detract from your ability to save to buy a home, especially if you aren’t using them as much as you’d like to. Here in the Pacific Northwest there are multiple trails, hikes, and parks that are all free to visit and could mean getting out of the house for you. Many public parks also offer Yoga or Zumba classes in the park. There are also several fitness apps available for free download that give you step by step instructions on how to work out each day. Finding low-cost or free workout alternatives eliminates the monthly gym fee that is chipping away at your wallet and could be saving you hundreds of dollars a year.
When life gets busy, it’s easy to forget about small bills that are due. Not only are late fees annoying, but they also start racking up the interest which is taking away from your down payment budgeting. Many (if not all) of your utilities, credit card issuers and other debtors offer the option to set up Autopay which eliminates late fees and the stress of trying to remember which bill is due when.
If you’re serious in your goal to save to buy a home, budget flexibility is important to take into consideration. You are going to have days where you spend a little more on dinner with your family than you budgeted for. The key is to not throw in the towel all together and just make adjustments for the rest of the month’s budget. A little more spent in food, means a little less spent at Starbucks for the month. Being flexible helps keep this budgeting lifestyle sustainable for a long period of time.
Sure this is common sense, but medicine, doctor’s bills, and missing work can really take a toll on your budget. Missing work can leave you feeling behind and more stressed out to get back on track at work. The better care you take of yourself, the more you will be able to avoid unnecessary medical expenses or lost work time.
Carpooling helps save money in the gas department, but also in the parking fee department. Many times when working in a downtown location, the only choice to park is in a garage that requires payment. Find co-workers who live near you, and create a carpool schedule. This helps everyone save money in the parking area, and it also helps you get home faster since you’re able to take the HOV lane.
Your mortgage broker might be able to help you identify even more ways to speed up the process of saving to buy a house. If it’s time to save to buy a home then it’s time to take control of your budget, finances and spending. Giving up momentary ‘extras’ could help you get into the long-term lifestyle you want even more.
You might also like: 5 Ways to Pay Off Debt to Buy or Refinance a Home