5 ways to save for your down payment
By: Sarah Fong
I often get asked, “how much you should I save for a down payment?” The short answer is that you can never have enough. Having a larger down payment will help in lowering your monthly mortgage payment, which means freeing up more cash on a monthly basis for other things. If you feel you’ve got enough for a down payment, congratulations! If not, there are many ways you can scrape together the savings that you need.
Here are 5 ways to save for a down payment:
1. Buy a coffee machine. Sayonara, latte factor! Give yourself a rule that you must have your first cup of coffee at home each day. It doesn’t matter which coffee machine you get (filter, single-serve, Keurig – they all. make. coffee.). However, buying great coffee is the key. Many coffee shops, including the independents, sell the beans that they use in-store. Find a brand you like and stick with it!
2. Have a money-free weekend. One of the biggest costs of young people just starting out in their careers is food and entertainment. Who wants to miss out on drinks after work or dinner with the girls? You do, if you ever hope to buy a condo! Challenge yourself to having a money-free weekend, and see how many free and fun things you can find in the city or even at home. Get a library card and pick out a few books to read in the park. Dust off old board games and invite a friend over to play. Try anything once for free such as a one-time pass to the gym or a yoga class. Another great way to meet people and have some free fun is to join a local Meetup.
3. Freeze your credit card. If you find that you just can’t leave the credit card at home, try a more creative method, by freezing it. This is an especially good strategy for those of you who are impulsive buyers. For everyone else, freezing your credit card while you are condo shopping will keep you focused on your goal of saving for your down payment.
4. Get a second job. Unless you are working investment-banking like hours, you can get a second job to help get you to a down payment faster. Find something you are good at that someone would be willing to pay for. There are an endless number of things you could do – just check out the craigslist ads for part-time or etcetera jobs. Working from home? Walk a dog or two on your breaks. Cooking Indian food is your specialty? Teach a continuing education course at your local school board. Good at math or English? Be a tutor.
5. Get a good financial advisor. Sure, this may not seem like a savings plan, but finding someone who knows how much you need to qualify for a mortgage and how budget for it, can help get you there faster. They can put you on an automatic savings plan, where a portion of your paycheque automatically gets saved every month. You’ll be saving faster than you know it. The bonus is that when it comes time to getting that mortgage, you already have someone on your side who knows you and can help get you discount off of the posted mortgage rate.
Choosing just one or two of these ways and sticking to it, can help you reach your goal of home ownership much faster! Start saving today.
There are an endless number of ways to save for your down payment. How are you accomplishing this goal?