One of the most significant hurdles to overcome when buying a home is saving enough money for a down payment. Second behind that is poor credit which we talk about here. Saving money is hard and when it comes to keeping more of their hard earned money the majority of Americans are all in the same boat. Take a look at this recent survey which suggests a surprising 57 percent of Americans have less than 1000 dollars in savings, and a staggering 39 percent have no savings at all. The struggle to save money in today’s economy is a genuine struggle.
So what can you do about your situation? Saving money is a mentality, a commitment, and a sacrifice. Saving money all starts with having a mindset that you are going to spend less. Spending less can only happen by identifying ways to cut back your spending. After you’ve determined areas to cut back your spending, you have to commit to making those changes. And finally, acknowledging that change requires sacrifice.
Keep in mind, some of these steps may not apply to your situation. You should take these steps to heart but do not get bogged down in absolutes. Only do what you can and only when it makes sense for you to do it. Let us look at some steps you can take to help you save money and afford a down payment.
- Examine your expenses
Like we said earlier, you have to start by identifying where you are spending your money and examine where you can make changes. Look at your monthly bank statements and go through every line item to decide where you are spending too much money.Take some time to examine every aspect of where you are spending money and then think about how you can adjust your spending habits to save money and spend your money in a way that is more efficient. A great example here is grocery spending vs. dining out. If you are paying $600+ a month, on both dining out and groceries, then you are probably spending too much money in one of those areas, and you need to cut something back. The same goes for subscription services of any kind such as magazines or mail order services for which you are being billed but do not use very often.
- Negotiate your service contracts
Periodically look at your service contracts for cell phones, television, internet, or anything else for which you pay a monthly service fee. Call up these companies and ask for discounted rates or a reduction in service plans. Threaten to switch providers if your current one will not give you a good deal. You have to start thinking more about helping yourself save money. No corporation is going to give you a discount unless you demand one.
- Pick up a side hustle
Look for a way to make money on the side. There are many people these days turning their crafts and passions into semi-successful side businesses to help supplement their income. If you are a crafty sort of person, think about things you can make and sell on sites like Etsy. If you are technical, consider contracting out your expertise to people who need someone with your skill sets. If you do not have a skill, find something you are passionate about and start doing it. Always think about ways you can supplement your income from numerous sources.
- Say no to consumerism
The minimalist lifestyle is not for everyone, but there is one thing you cannot deny about being a minimalist, it is a money saver. You do not have to adopt the lifestyle of a minimalist in its entirety to enjoy its benefits. Even just taking the step to reduce your need for material possessions and clutter means you are spending less money.
- Smarten up about entertainment.
Try to eliminate excessive entertainment expenses. Reduce how much you spend on clubs or outings. Try doing things with friends and family that require a minimal investment, such as gaming nights, or camping trips.
- Pay yourself
Making a monthly payment to yourself is a habit everyone needs to adopt. Make sure you pay yourself before you pay everyone else. Set aside money in your budget to make a payment to your savings account every month. A monthly deposit paid to yourself does not have to break the bank and can start as low as a $1. The critical aspect to remember here is to get into the habit first and then use the other steps outlined above to try to increase how much money you can pay yourself instead of spending elsewhere.
Make a promise to yourself this year and start saving money to buy or rent-to-own a home.