You’re tired of renting, and you’re ready to move into your first home. Or perhaps you and your spouse are ready to start a family and need more space. Whatever your reasons for considering buying a home, you’ll need to come up with your deposit first. Most people will want to put down a deposit of at least 5% of a home’s price, though there are loans that allow buyers to make a smaller deposit. For a home listed at $200,000, that means you’ll need at $10,000 for a deposit. That’s a daunting amount of money! But there are some things you can do to help save for that deposit.
Evaluate your spending. It’s cliche, but the first step to take as you prepare to save your deposit is to evaluate your day to day spending. You don’t have to live on rice and beans for a year, but you are likely to find small expenses that mount up quickly. If you can save even $10 a week by not picking up coffee on the way to work, you’ll have a nice chunk of change by the end of the year. Cancel unused subscriptions, look for cheaper deals on your cell phone, and put a freeze on unnecessary spending. It will be worth it.
Consider downsizing. If you currently rent, consider moving into a smaller and/or cheaper place for a year to save money. The trick to this is taking the amount you save over your old rent and sticking it in savings. After all, you’ve been paying that amount every month all along — why not keep the budget the same and just bank the difference? Moving into a smaller place to save money can be tough, but remind yourself it’s only for a limited time and it’s getting you closer to never renting again!
Pick up some extra income. Be warned that this will take time out of your life, and be honest with yourself about whether you can handle a second job or a side hustle. If you decide that you are up for the challenge, you can either find a conventional second job (retail, barista, and the like) or you can freelance through sites like Upwork and Elance. If you have a skill that you can market on your own, hang out your own shingle and take on proofreading clients, yardwork jobs, or even dog walking.
Search out “found money.” Remember those savings bonds Grandma used to give you each birthday? Check to see if they’ve matured, and then cash them in towards your deposit. Check your state’s unclaimed property board to see if you have money hanging out from an old bank account or unclaimed rental deposit. And if you have a windfall — whether it’s $10 from a scratch-off lottery ticket or $3 in pennies from the couch — put them aside for your deposit. It’s money you didn’t even know you were missing! If you get a tax refund or other refunds and reimbursements throughout the year, put these aside too.
Sell your stuff. Especially if you’re already downsizing to a smaller place, go ahead and sell your stuff. Be realistic about what you can get for things, but also realize that any funds you generate are a help. Hold a garage sale, list collectibles on eBay, or take clothes to a reseller. If you are really ambitious, consider going down to one car and selling your family’s second vehicle. If you have a boat, motorcycle, jet ski, or other recreational vehicle, consider whether you can do without it in exchange for the deposit money it will generate.