Even if you don’t plan to buy a home anytime soon, starting to save for a down payment is always a good idea. Unlike saving for retirement, where you won’t see the funds for years and can put away a little at a time, this is something that needs to be accessed much more quickly, so here are some steps and ideas to get the process started quickly.
Step 1: Figure out how much you need to save. Talk to a lender and determine how much you can qualify for when purchasing a home and how much you’d like to put down as a down payment. 20% is not a requirement.
Step 2: Determine your time frame. The shorter the time frame, the faster you’ll need to save. Divide the number of years by the total down payment you hope to put down.
Step 3: Start a budget. Look at your current monthly expenses and see where you can cut back. Be creative! Try to carpool more, cut coupons, bring lunch every day, rent out a room with AirBnB, or save on energy costs by reducing your use. Embrace the changes, it’s all worth it!
Step 4: Set up an automated payment. Unless you’re a natural saver, the best thing you can do is have a certain amount or percentage moved to a savings account each month. This helps make the process automatic and invisible.
Step 5: Start Today! Saving for a down payment is tough. It takes perseverance and focus, so the best thing to do is start now.