Hoping to move out of your rental (or your parent’s) but not sure how to save for a house? While pinching pennies isn’t easy, it can be done with the help of the right tools and strategies. From automating your savings to starting a side hustle, here are 10 simple ways you can begin saving for a house today.
How to Save for a House
- Open a savings account
Fortunately, you no longer have to walk into a brick-and-mortar bank to set up a savings account. Nowadays, many banks offer online savings accounts that customers can set up anywhere, anytime. In addition to being convenient, opening an online savings account may help you earn more compound interest on your deposits. According to MagnifyMoney.com, “if you are willing to open an online savings account (which is FDIC insured), you can now easily get a 1.65% APY or higher.” The credit card and bank account comparison site points out that while brick-and-mortar banks are still doling out low rates (think: only 0.01% APY), online savings accounts are continuing to raise their rates – making it easier for users to earn solid compounding interest on their savings deposits.
- Automate your savings
When you set up a savings account, make sure to automate it on a monthly basis. This way part of your paycheck will automatically go into your savings account before you are tempted to spend it elsewhere. Trust us – this small step will make a big difference in your savings and will help curb the urge to spend your paycheck on unnecessary items.
- Cut back on “little” luxuries
Believe it or not, those little luxuries add up. So now’s the time to cut back on that daily cup of Starbucks coffee and those pricey meals out. Other little luxuries that are easy to temporarily put on hold include cable TV, magazine subscriptions, expensive books, massages, manicures, meal delivery services, haircuts, clothes and any other expenses that go unnoticed most months.
- Create a budget
Without a reasonable and realistic budget, you won’t be able to pocket enough cash for a down payment. Fortunately, creating a monthly budget is easier than it sounds. To start, we suggest first taking a good look at what comes in and out of your bank account every month. In other words: your income versus your expenses. After canceling those little luxuries (i.e. magazine subscriptions, meal delivery services, etc), keep track of recurring, fixed expenses, such as rent payments, utilities, car payments and other bills. Decide how much you need (and are able) to place into your savings account each month. From there, figure out how much money you have left to spend on miscellaneous expenses such as groceries and food. Once you have a realistic budget established, you should be able to start saving in no time.
- Save your tax return or year-end bonus
When saving for a house, don’t spend that hefty tax return or year-end bonus on clothes. Instead, deposit it into your savings account as soon as possible. This is an easy way to instantly boost your savings and speed up your home buying timeline.
- Freeze (or end) your gym membership
For many, a gym membership is a monthly expense they can live without (at least, for a short time!). So freeze or end your membership to avoid paying high monthly membership fees while you save for a house. Instead, go for runs outside, find free classes or utilize free workout apps.
- Take on additional jobs
Save money faster by earning more cash on a monthly basis. If you already have a typical 9 to 5 job, we suggest starting that side hustle you’ve been contemplating for a while. A few examples of ways to earn extra income include freelance writing, babysitting, dog walking, freelance photography, tutoring, selling artwork, or driving an Uber/Lyft. If you decide to branch out and find a new job altogether, start brushing up on new skills and dusting off that old resume.
- Track your spending and expenses through Mint
If you haven’t already, go ahead and create a Mint account. This free personal finance tool makes it easier than ever to manage your money and keep track of expenses. You’ll be able to see bills, expenses and income all in one place. By compiling your finance details together, Mint makes it easier to create and stick to a budget.
- Find a roommate
Paying for rent all by yourself? Try to find a temporary roommate to split your monthly rental payment in half. Chances are, your monthly rental check is your highest, recurring expense. Living with a roommate can dramatically cut down on your costs. In addition, you’ll be able to split utility bills and general needs (think: toilet paper and paper towels) with the new roomie.
- Pay off credit cards to get out of debt
While it’s important to reserve cash in order to save up for a house, it’s equally important to pay off any outstanding debt you already have. The reason? If you plan to purchase a home with credit, you’re going to need a good credit score. Without it, you’ll be hard-pressed to find banks willing to lend you money for the house. Even if you do manage to find a mortgage lender, your interest rate is sure to be sky high. One of the best ways to improve your credit score is to pay off your debt (especially on high interest credit cards) and continue making minimum payments as well. Read our article on why establishing good credit is an important first step to homeownership.
More quick tips for how to save for a house
- Ask for a raise
- Instead of buying books, apply for a library card
- Use coupons
- Take advantage of discounts and deals at local restaurants
- Work on improving your credit score
- Use money saving mobile apps
- Have a friend of family member keep you accountable
Ready to buy a house?
You’ve saved up for a house and are ready to make a purchase. Congrats! Once you’ve closed on the house of your dreams, start looking for movers using Moving.com’s extensive network of reputable and reliable moving companies. All movers in our network are licensed and insured, so you can rest assured that your move will be in good hands. Best of luck and happy moving!