For most adults, becoming a homeowner is a major accomplishment. Owning a home is incredibly rewarding, both emotionally and financially.
But if you’re like most Canadians, buying a home isn’t necessarily a walk in the park. Homes under $500,000 require a 5% downpayment. If you’re purchasing a home for $300,000, for instance, you’ll need to come up with $15,000 upfront.
However, 53% of Canadians live paycheck to paycheck. If you find yourself in a similar situation, how can you save up enough money for a downpayment?
If you want to learn how to save money for a house, we can help. Keep reading for our top 11 money-saving tips.
1. Downsize Your Current Living Situation
One of the best ways to save money for a downpayment on a home is by minimizing your current living expenses. Downgrade to a smaller home or apartment while you save up for your next house.
If possible, move in with a friend or relative to maximize your savings. Living in a spare bedroom for a few hundred dollars a month can help you save hundreds, if not thousands of dollars a month.
This might require renting a temporary storage unit to house all of your possessions. However, you’ll still be saving tons of money each month, which will help you buy a home sooner.
2. Rent Out Your Assets
If you own your current home or don’t have the option to downsize, that’s okay. There’s another solution.
Rather than moving out of your home, move someone else in. Rent out your spare bedroom to someone looking to rent a temporary living space. Their contribution toward your rent or mortgage payment will help you save hundreds of dollars each month.
If you don’t have a spare bedroom, you could rent out storage space. Charge people to rent space in your attic or garage to store excess items rather than using an expensive storage unit.
Finally, if you have an extra car, rent it out to someone who doesn’t own a vehicle. Of course, you’ll need to get their license and verify your auto insurance coverage for other drivers. If you don’t have an extra vehicle, you could rent your primary vehicle out on the weekends when you aren’t using it.
3. Control Your Shopping Habits
Learning how to save money for a house often means implementing discipline and self-control surrounding your buying habits. Most of us fall victim to emotional shopping.
In other words, we buy stuff they don’t need when they’re having a bad day. We are also prone to buying stuff we don’t need if the item in question is on sale.
This type of impulse shopping translates to thousands of dollars a year spent on unnecessary items. Learn how to control impulse buying by implementing healthier (and more financially responsible) coping mechanisms.
4. Cut Out Unnecessary Expenses
Adopting better shopping habits is an important step in learning how to save money for a house. However, the average consumer wastes a lot of money on other unnecessary expenses outside of impulse buying.
For example, how many TV and movie streaming apps do you pay for? Are you also paying for cable? You don’t need that amount of TV in your life, particularly if you’re looking for ways to save money.
Limit yourself to a single TV/movie streaming app and cut the cable. While you’re at it, get rid of unnecessary or unused subscriptions and memberships. This includes:
- Fitness centers or gyms
- Mystery boxes and other recurring product deliveries
- Smartphone apps
Lastly, limit how much dining out you do. Paying $15 or more for a meal is unnecessary and wasteful. Make all of your meals at home and stop buying commercial coffees.
5. Use Credit Cards Wisely
One of the best money-saving tips is learning how to use credit cards in a way that’s beneficial to your bank account. First, if you have trouble controlling your spending, set up limits on your credit and debit cards.
Secondly, understand the different types of credit cards and how you can earn points, rewards, and cash. You can earn a lot of money using credit cards for your daily expenses. However, if you want to avoid interest fees, you must pay your card off weekly or monthly.
The worst thing you can do is max out a credit card and make minimum payments. You’ll end up paying thousands of dollars in debt each year. You’ll also fail to ever pay off the card, as most of your minimum payment will go towards the interest.
6. Pick Up a Side Hustle
As noted earlier, learning how to save money for a house requires discipline. It might also require some sacrifice.
To maximize your savings, ask for more hours at work. If you don’t have a type of job that allows you to pick up more hours, find a second job, or side hustle.
The options here are nearly limitless. You can pick up a part-time job doing something as simple as waiting tables or cleaning dishes.
Alternatively, start your own thing. You could:
- Walk dogs
- Clean houses
- Wash cars
- Write blog content for small businesses
- Manage social media profiles
- And more
There is a ton of online work you can find that you can do remotely. This allows you to work part-time from the comfort of your couch.
7. Find Ways to Earn More Money
If you want to save money for buying a home but don’t want to commit to a second job, you can find other ways to earn extra cash. Go through your belongings to find unwanted items you could sell for money.
High-value items like electronics, recreational equipment, brand-name clothes, and appliances can be sold for a decent amount of money online. Use Facebook, Craigslist, and other free resources to post your items for sale. We don’t recommend using pawn shops, however, as they rarely pay a fair amount for items.
8. Set Financial Goals for Yourself
Identifying how much money you need to save is an important step in learning how to save money for a house. First, take a look at the different types of home loans available to you. Then, get preapproved to determine the prices of homes for sale you can afford.
If your lender approves you for $250,000, that means you’ll need to come up with 5% of that figure, or $12,500. Based on what you find out, you can set financial goals for yourself. For example, set a goal to save $200-$300 a month until you put away enough money for your downpayment.
9. Put Yourself on a Budget
After identifying the ways to save money for a house, you need to implement a strategy to reach your financial goals. For most people, this means creating a strict budget.
We recommend using money-saving apps that can help you set goals, set limits, and track your spending. It’s also a good idea to automate financial transactions. For example, you can set up your bank account so that it automatically transfers a certain amount into savings each month after you get paid.
10. Downgrade Your Car
Did you know that the average new car owner in Canada pays almost $600 a month on their car loan? If you’re looking for tips on how to save money for a house, start by getting rid of this major expense.
Downgrade your car to something more practical and financially prudent. You don’t have to drive a beat-down rust bucket, but you don’t need a brand new vehicle either. You can find a clean and reliable used car for under $15,000, which could cut your payment in half.
11. Consolidate High-Interest Debts
Finally, take a look at your monthly costs in terms of debt. How much money are you spending each month on payments related to debt? This includes car loans, credit cards, personal loans, etc.
The debts that carry high-interest rates are costing you a ton of extra money. Consider a loan consolidation that will absorb these debts into a single debt with a lower interest rate.
Not only will you save money on the interest, but you’ll also only have one payment. This singular payment will be less than the combined payments of the debts it absorbed. For many consumers, this gives them the breathing room they need to gain traction with their finances.
Do You Know How to Save Money for a House?
As you can see, there are plenty of practical ways you can learn how to save money for a house. You can use some or all of the tips listed above to make your dream of buying a home come true. And if you’re looking for more help, we have more to offer.
Take a look through the rest of our blog to find more money-saving tips and financial advice. And if you need help covering an unexpected expense, apply for a loan today. We are more than happy to provide a solution to your financial problems.