As a real estate agent for almost 18 years and a homeowner for 23, I know firsthand that saving for a down payment isn’t easy. Crafting a budget and consistently sticking to it can feel like an uphill battle, but if homeownership is a goal you’re serious about, it’s a battle you can win. It takes sacrifice and a solid plan, but I want you to know you’re not alone and that it is absolutely possible. Let’s explore some practical strategies and insights to help you fast-track your way to your financial goals.
The cornerstone of financial success is a robust personal budget. If you haven’t already, begin by establishing one. Here’s a five-step method to help you reach your financial objectives.
Create Your Personal Budget
- Figure out your after-tax income
- Know exactly how much money you are bringing in each month. This is your take-home pay, also known as net income, and the starting point for all your budgeting calculations.
- Choose a budgeting system – There are several methods you can use. The most popular is the 50/30/20 rule.
- 50% is ‘needs’
- 30% is ‘wants’
- 20% is savings and debt payments
- More budgeting systems here.
- Track your progress
- A budget is only effective if you stick to it. Use a spreadsheet, an app like ‘Monarch Money.’ This way, you can also identify areas where you might be overspending.
- Automate your savings
- Make saving a non-negotiable for your new budget and routine. Set up automatic transfers from your checking account to your savings or investment accounts every payday.
- Practice budget management
- Your financial situation will change over time, so your budget should be flexible. Regularly review your income and expenses to prepare to make adjustments as needed.
You’ve mastered your budget and are diligently saving for a down payment—that’s a huge step! You’ve laid a strong foundation, and now it’s time to explore the next part in your journey towards a new home and boost your savings.
- Invest in rental properties without the hassle of mowing lawns, dealing with tenants, or fixing maintenance issues. You can invest as little as $100.
- Browse curated homes that have been vetted for this investment purpose from Arrived.com, an online tool vetted by Jeff Bezos and other world-class investors.
- Once you find a property you like, select the number of shares you’d like to purchase and start watching the investment take shape in your bank account.
- You can learn more about this and other ways of investing here.
- Unlock Your Current Home’s Potential: Start by assessing your financial readiness to purchase a new home and get pre-approved for a loan.
- Find Your New Home: With your pre-approval in hand, find your new property and create a detailed timeline for the move.
- Prepare to Become a Landlord: To prepare your current home for renters, research local laws and your mortgage terms. Then, get the property rent-ready, set a competitive price, and use platforms like TurboTenant.com to screen for qualified tenants.
- Cover Your Costs: Once you’ve moved into your new home and your renters have moved in, use the rental income to help cover your new mortgage payments.
- Other ways to save or earn money:
- Cancel subscriptions and trim down monthly expenses like phone plans, streaming, apps, etc.
- If you can, pay off high-interest debts and credit cards
- Buy in bulk or prep for your grocery trips with a plan
- Try the 30-day rule to curb impulse buys. If a more expensive item catches your eye, wait 30 days. If you still want it after a month, it’s likely a worthwhile purchase.
- Refinance your car loan
- Reduce eating out and meal prep instead!
- Join Rover and walk dogs or pet sit for your local neighbors.
- Sell unwanted furniture, clothes, and other items on Facebook or host a garage sale before winter.
- Rent out that spare bedroom or your basement on Airbnb.
