Six easy ways to save money for a home down payment

Michele Lerner

THE WASHINGTON POST – If your plans for 2020 include buying a house, focus now on keeping your spending in check and building up your savings for a down payment, closing costs and moving expenses. We asked Katie Bossler, a financial counsellor with GreenPath Financial Wellness, to share simple tips for reduced spending and increased savings.

Here are Bossler’s suggestions:

DON’T TRANFER MONEY FROM YOUR SAVINGS ACCOUNT TO YOUR CHECKING ACCOUNT UNLESS IT’S AN EMERGENCY

If you find yourself doing this often, consider having a checking and savings account at two different financial institutions. It takes longer for the transfer to go through, and the extra barrier can help you avoid unnecessary purchases.

READ THE FINE PRINT WHEN SIGNING UP FOR A NEW SUBSCRIPTION OR SERVICE

If your plans for 2020 include buying a house, focus now on keeping your spending in check and building up your savings for a down payment, closing costs and moving expenses

Otherwise, you may find that you enrolled in a service with an automatic payment plan. Review your credit statements each month to make sure you didn’t unknowingly sign up for a service. Don’t forget to include monthly and annual subscriptions when planning your budget.

AUTO-DEDUCT SAVINGS FROM YOUR PAYCHEQUE EACH MONTH

If your employer offers direct deposit, have your deposit split into two different accounts: a savings account and a checking account. If you are paid biweekly, depositing USD150 from each paycheque will net you almost USD4,000 per year.

LEAVE ONLINE PURCHASES IN THE CART FOR 24 HOURS BEFORE PURCHASING

You will either forget about them or have more clarity on whether you need them. The average United States (US) consumer spends about USD450 per month on impulse buys. That is about USD5,400 per year that could be saved.

CREATE A SEPARATE AND SPECIFIC SAVINGS ACCOUNT FOR YOUR DOWN PAYMENT FUNDS

Separating it from any other emergency fund or your general savings/checking account gives you a clear vision on where you’re headed, how much you’ve saved and reminds you of your goal.

Separating it also helps stave off the temptation to dip into those funds for other purposes and will help you stay on track.

BUDGET AND AUTOMATE

Make an effort to budget the amount you can afford to put toward your savings, then see how you might increase it.

Perhaps forgo your specialty coffee two days a week?

That’s an extra USD25 a month right there. And automate your savings plan. Create an automatic deposit to move funds into your down payment savings account.

Not having to stop your day and move that money is helpful. It also ensures the funds don’t linger where you might be tempted to spend them rather than push forward toward your goal of homeownership.