Everyone needs a home to live in, but not everyone has that big chunk of money you need to put down for a down payment. If you fall in this category – it’s OKAY! You can still make your dream home come true, if you are disciplined in following the 5 steps listed below!
1. Set A Goal
To be able to save up, you first need to set certain guidelines and objectives for yourself. Make sure you know the amount of money you need to have saved up and the time frame within which you need to save it. In this way, you know how much wiggle room you have for a “cheat day”, and you will get a clear idea on what it will take to achieve your goal.
Imagine you need to save $30,000 in 2 years. When you break it down, this means you need to put away $1,250 every month for 2 years. In a two-income household, this will be doable if you employ certain strategies. The rest of this article will suggest some good ways to save up for a down payment, a nice car, an extravagant vacation or any other big purchase you want to make.
Make sure you keep it realistic. Don’t set yourself up for failure from the start by setting goals that are unachievable given your situation.
2. Find Out Where Your Money Goes
To be able to save up, you would need to cut back on your spending. To do that, you’d need to figure out what your spending habits are. It could be little things that you don’t even realize you are spending on. Imagine you pay $50 a month on going to the movies, $250 on dining out (if you eat at restaurants just 3-4 times a month), if you buy a coffee at Tim Hortons every day that’s another $50 and buying lunch would be roughly $150 more, $40 on a gym membership you never use. That alone easily represents a single person’s unnecessary expenses for a month. If there are two people in the family, and you cut those out, you would’ve nearly reached your monthly saving goals of $1,250. These are just some examples, but everyone spends money on unnecessary things, and you just have to figure out what those are for you. Click here for 20 ways to prevent unnecessary spending!
3. Find A Way To Make More
While cutting back is key, sometimes there is only so much you can save after paying all of your bills and other necessary expenses. You could always pick up becoming an Uber driver, which is one of the latest, easiest and most flexible jobs you can get nowadays. You could pick up a part time job or sell some of your possessions that have value but you never use. You could go on websites like Craigslist and check out the “odd jobs” section, where you can find some pretty fun jobs to do for just a day here and there, but it adds up. Get creative!
4. Avoid Paying Interest
If you have a credit card with an outstanding balance on which you pay interest, find a way to transfer money around. Don’t have money in your debit if you owe on your credit card. Maybe you have some relative who can loan you the money while you pay off the balance, sparing you the interest, which we all know could be a considerable amount of money depending on the loan amount and its terms.
5. Use Cash, Not Plastic
Multiple behavioural economics surveys say that people spend more money when they use cards instead of cash. Dun and Bradstreet, for example, found that people spend 12-18% when using a card versus cash. Even McDonald’s has reported that customers who pay with cards spend an average of $7, while those who pay in cash average at about $4.50. Moreover, cards allow for impulsive buying because money is so readily available. If you choose to pay with cash at all times, you will find that you cannot impulsively buy something expensive since it will require you to go to the bank and take money out, by which time you are likely to change your mind about your purchase.
Bottom line: there is always a way to save up money, as long as you put your head to it. Pack a lunch to work, exercise at home, pick up an extra shift and leave your credit cards at home. Keep thinking about the big picture, or the big, beautiful house you will live in when you reach your goals!
September 9, 2016
Team Riaz Ghani