Saving up for a down payment might be the biggest obstacle young people face when they want to buy a house.
Sometimes the down payment seem a little overwhelming that people start thinking they will never make it.
But, saving some money here and there may add up more than you can even imagine!
And here are some tips that will help you do so.
Before you start saving you need to know how much you need to save.
Take a look at the houses in the area you want to buy in, get a round figure. How much will you need to pay as a down payment?
Do not forget that you will also need to pay extra expenses for taxes, foreclosure and insurance.
Plan your monthly payment
Generally, your monthly payment should not exceed 28% of your monthly income.
Plan accordingly and figure out how much you need to pay as a down payment and how much can you afford to pay as a monthly payment.
Plan your timeframe
After you calculate the numbers and find out how much you want to pay for a down payment you need to plan your timeframe.
For example if you need 30,000$ for a down payment and you want to buy a house in 3 years you need to save 10,000 each year.
Start a savings account
Next step is to open a savings account in the bank. Any money that you want to save for the house goes directly to that account.
And no withdrawals from that account! Under any circumstances!
Create a monthly budget
Create a monthly budget and stick to it. This will help you stay organized and also find areas where you can cut off some more money.
It may seem difficult now, but once you start writing down every penny you spend, you will find out that there are some extras that you do not really need.
Cut down on your rent
Rent takes the biggest chunk out of your budget, cutting down on your rent expense will save you a lot of money.
Try moving to a cheaper apartment, if you do not really need the extra room you can for example move from a 3 bedroom apartment to a 2 bedroom one, and save the rest of your rent budget in the bank.
If you can cut 100$ each month, that means 1200 by the end of the year.
Rethink expensive purchases
Rethink expensive purchases such as buying a car for example. Before making any big purchases think first: Is this more important than buying a house?
If you absolutely need to make this purchase now then that is fine, but if it is something that can wait until after you get your house then put this money in the bank.
Let go of unnecessary expenses
If you really want to buy a house you need to reconsider all of your small expenses.
Can you live without cable TV for one year? Cable TV costs around 100$ per month, saving that and watching regular TV means saving 1200$ per year.
Do you buy breakfast or lunch at work every day? Saving that money by preparing your own meals adds up more than you think.
And so on and so on, write down how you spend your income every month and reconsider what is necessary.
Do not neglect windfalls
Splurging for out-of-your-budget purchases might be tempting, but adding any windfalls to your savings account is the smartest thing to do.
Windfalls are the occasional events that bring extra money into the household. Such as an end of year bonus for example.
Instead of spending that money think of it as money that can be used to increase your savings account quickly without dipping into your regular income.
Spending less is the obvious way to save some money, but working more and bringing home more money is also an incredible way to infuse your savings.
If you are eligible for overtime or additional work, do not hesitate to take every opportunity that comes your way.
And if you are not, consider taking a part time job, or even freelancing on your free time.