If you want to save up a sum of money but are not sure where to start, we’ve got a plan that can help. Saving for a downpayment takes both discipline and creativity. Once you have a plan in place and put it into action, you’ll be able to see your money grow—a very satisfying feeling. Soon you’ll be on your way to buying a new home!
Determine The Amount You Need To Save
To save for a downpayment it helps to have a final figure in mind. Determine the amount you need to save and draw up a savings plan. Having a 20 percent deposit is ideal; it will save you from having to buy mortgage insurance from the Canada Mortgage and Housing Corporation. One of the key factors in this savings plan will be your timeframe: when will you need the money? Your timeframe will give you a firm end date, so you’ll know exactly how much you need and when.
Cut Back On Unnecessary Expenses
To help on your savings journey, try to cut back as much as you can on any unnecessary expenses. Trim a few indulgences from your weekly spending: make your own coffee or tea daily instead of buying out, cook at home (and pack your lunches) rather than dining out or ordering in, and maybe even stop non-essential shopping for a while. The other approach to boost your savings is to supplement or increase your income. You can take on a side hustle, add a part-time job to the mix, work odd jobs, ask for extra shifts at work, or even sell some items you no longer need. Doing both will definitely help you save for a downpayment faster.
Set Up Automatic Savings
When you are saving for a downpayment it can really help to automate your savings plan. You can do this easily—and for free—via online banking. Automatic savings plans are excellent because once you have set them up you can completely forget about having to transfer money from one account to the other. You don’t have to keep track of dates and amounts. It’s also easy to fine tune, so if you find you have a few extra dollars to put away you can refine your plan on the spot.
Bank Any Extra Cash
Life is unpredictable. If we’re lucky (often when we least expect it), we may one day receive money from an unexpected source. Maybe you suddenly have some extra cash on hand, experienced a windfall of some kind, or got a decent tax refund. No matter where the money comes from and how much or how little, every bit of it moves you closer toward your savings goal. Another tip? Track your savings and be proud of your progress. There are lots of little milestones to celebrate along the road to your end goal.
Keep An Emergency Fund
Focusing on saving for a down payment is important, but so is making sure you always have a financial safety net in place. Don’t borrow from your emergency fund or neglect making contributions to it just because you are trying to save up this big sum. We all need to have money to fall back on, to carry us through in case something goes wrong. Don’t risk your peace of mind. Keep up your great habits!
Try one (or more) of these financial strategies and see the impact on your savings account. Thanks for reading and don’t forget to follow the Gemterra blog for more great information about saving for your dream home.