4 Low-Effort Ways To Start Saving for a Down Payment on a Home
Written by
Peter Burns
Edited by
Molly Sullivan
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Saving up for a new home can be intimidating, especially if you don’t have a plan. There are many methods for hitting your down payment goal, though, and some are surprisingly easy.
Here are four low-effort ways to start saving for a down payment on a home.
Budget
Budgeting is an integral part of saving up for a down payment. Even if you earn a high income, if you spend everything you make, there won’t be anything left over. A simple solution is to download a budgeting app. These apps can come as a paid subscription or in a free version, but they’ll all help you track your spending and determine where you can save more.
For some, a budgeting app alone won’t curb their habits, but there are other methods that might help. The envelope method involves taking cash out of your bank account and dividing it into envelopes. Each envelope is your allowance for different spending categories, such as groceries, eating out, entertainment and gas. As the money dwindles inside an envelope, you’ll have no choice but to spend less in that area. In the end, you’ll be able to save more and develop better spending habits.
Automate
Even if you have a budget and track your spending, you can take your savings to a new level with automation. Most bank accounts allow for automated transfers, meaning you can time your bank transfers for the day after you get your paycheck. Automating your income to put a fixed amount toward a savings account, investments and debt repayments will reduce your debt and the temptation to spend whatever you have in your account.
One good option is sending a fixed amount of your income to a high-yield savings account. High-yield savings accounts allow you to earn more on your savings than traditional savings accounts without taking on the risk of putting your money into the stock market. However, you may have limitations regarding withdrawals and transfers, so plan ahead or speak with an advisor.
Unsubscribe
These days, seemingly everything is a subscription service. Subscribing to more services means it’s easier to forget what you’re paying for, which can add up. Going through your bills to figure out exactly what you’re paying for each week can help you put more money away for a new home. When you run through your list of subscriptions, consider how much you use each service. Sometimes, it’s best to cancel the subscription to see if you’ll even miss it.
Next Gen Personal Finance reports that the average American pays $55 a month for video streaming services alone. Limiting yourself to just one streaming platform might seem inconvenient, but it may pay dividends in the long run.
Sell
Over time, everyone accumulates a lot of things that they don’t need. Like subscription services, getting rid of clutter will not just bring you peace of mind, but it can also add up. With plenty of online marketplaces, it takes just a little time to list the electronics, the clothes or even the pieces of furniture you no longer use. Once you list the items, you just need to sit back and be patient until someone sends you money, which you can then contribute to your down payment.
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