Buying a house is a magical time in anyone’s life. Nothing beats imagining you and your family in your very own home. But, it is a lot easier said than done.
The one thing that many people don’t know how to prepare for is the deposit that needs to be made.
Most banks will not give you a home loan without at least a 10% deposit down. That means if you are looking to buy a $100k home, you will need at least $10,000 cash on hand.
Here are some of the best ways to save for a home deposit when you’re already living on a low income.
I don’t know many people who are prepared to make such a payment. The only real option you have is to save for this deposit.
But, how can you save when you are already living paycheck to paycheck?
There is no shame in living hand to mouth, but, it does mean that you need to adjust certain things in your life. However, it is not impossible to get what you want!
1) Skip The Drive-Thru
One of the biggest places we spend money is on food and drinks.
If you’re like me, you didn’t really start cooking for yourself until after college. Eating out often will take a huge chunk of money out of your pocket each month. This is even true for fast food options that tend to be a lower cost.
On average, a fast food meal will cost $10 per person. That’s $40 a day for a family of four.
If you tend to eat out at least twice a week, you are spending over $300 a month on fast food alone. A family of four can easily live on a grocery budget of $120 a week.
This includes meals that you will prepare at home.
As a mother, I know how hard it can be when life is busy to cook each night for a large family. I try to limit the amount that we eat out to just once a month.
By just doing this little trick, you can save upwards of $250 a month.
That is money that you can directly put into the home saving fund. If you are diligent about this, you can on average $3000 a year which is 30% of your overall deposit!
2) Skip The Coffee Runs
While I don’t tend to spend money on restaurants, there is one place that I can’t always resist – my local coffee spot. I buy coffee more times than I would like to admit.
Even though a cup of coffee is far less money than a meal, we tend to visit these places often. Two cups of coffee a day adds up to roughly $8.
If you’re like me and get coffee each day, that is almost $100 a week in coffee alone. One major way to save is to only drink coffee from your home. A can of coffee can make 15 pots of coffee for around $10 a can.
That comes out to be just $20 a month which can save you on average $300 a month on coffee alone.
That means if you skip the coffee for one whole year, you can potentially save $3000 a year!
Between coffee and food, you can save almost $6000 a year for your deposit!
3) Save Smarter – Not Harder!
Did you know that it is much easier to save in the digital age? There are so many programs and platforms that are geared at helping you learn how to manage your money smarter.
I love using applications that can be customized to my financial needs. Certain applications like these also give you real-time updates to help you reach your goal.
But, which ones work the best when it comes to saving up for your home deposit?
Here are some of the top money-saving and managing applications out there:
4) The Acorns App Work Great!
Acorns is a saving and investing application available for Android and IOS customers. Best of all, the app is 100% free to use and sign up! All you will need to do is connect your bank account with the application and Acorns does the work from there.
There are several different ways to use Acorns to save up for your down payment for a house.
First, is their round-up program. This program will round-up purchases made on your connected bank card to the nearest dollar amount. It will then take that money and put it into a savings account in the Acorns app. While a few cents here and there doesn’t seem like much, it adds up quickly!
You can choose to save these earnings or cash them out at any time.
Next, you can choose to invest with Acorns.
Acorns will take $5 out of your account each month and invest them in ways that will benefit you. Acorns will make you a customized financial portfolio. From here you can see your savings start to rise and the market fluctuates. It is also important to note that you can’t stop investing and empty your savings at any time!
5) Dosh Is Another Great Alternative
Dosh is another money-saving app that works with the purchases you make. Dosh has partnerships with certain restaurants and stores to offer you cash-back on your purchases.
You can get as much as 10% cashback by shopping at places you already enjoy. Best of all, Dosh saves all of your earnings on the app so you don’t have to think about it.
The best ways to save money happen when you don’t even know that they are working. Checking in on your Dosh account a few times a year is the best way to go! It’s like a little surprise every time you open up the application.
You can find that just spending money on everyday things can save you thousands of dollars a year.
6) Make Some Money From Stuff You Don’t Use
It can be hard for families living on a budget to save money. One of the reasons why is because salaries don’t always cover the general cost of living.
So, how are you supposed to save when the chips are already stacked up against you? Things like getting a second job don’t always apply to families either.
This is simply because there is not enough time to dedicate to a new job.
One way to make extra money without having to sacrifice your time is to sell things that you already own. One of the most profitable things to sell is children’s items. So, if you have kids, you are already ahead of the game!
People are always on the hunt for gently used kid’s items. This is a great way for families to save money while also being eco-friendly.
You can sell your children’s items on social media platforms like Facebook and Instagram.
But, there is an even easier way to get the most return for your buck! This is to sell outgrown clothing and toys at local consignment shops.
You might not get as much money as you may have hoped, but every little bit counts when you’re saving for a home.
Other Great Ways To Save Up For Your Down Payment
One of my favorite ways to save money has nothing to do with saving money at all. Confused? Don’t worry – I’ll walk you through it!
Changing the way you shop can make a huge difference in more ways than one. But, how can small changes help you save money? It’s easy!
Here are some small ways that you can make changes that will show a huge difference in your bank account!
7) Second-Hand Savy
I huge way to save money is to not spend money on new clothing. If you do decide to buy something new, try to make sure it was sustainably made. This means that the clothing will last longer and be a better quality which can save you money in the long run. Second-hand stores have come a long way from the thrift stores that you may be used to.
You can find quality and trendy clothing for you and your family at only a fraction of the cost. This is especially true for children clothing.
You can get a handful of clothing for under $20. That is a huge saving when you consider a shirt and pants for a child will run you the same amount.
8) Shop Locally
Another change to make to the way you shop is the way you buy fresh food. Food like vegetables and fruit get highly marked up in grocery stores. Even if the food is sourced locally, the stores still need to turn a profit.
One great way to save a little money is to go right to the source.
Local events like food fairs and farmer’s markets offer high-quality fresh food directly from the source for far less money.
Ever since I started primarily buying fresh food directly from farmers I find that I save around $40 a week. That’s a savings of almost $2000 a year!
9) Set A Realistic Goal
It is easier to save when you have a certain goal in mind. So, before you start your journey, know exactly how much you want to save. Also, you should start saving as soon as possible. I started saving for my home a year before I made an offer.
This means that you won’t have an exact house in mind. But, you should still have a general budget in mind.
Set Up A Savings Account
The next step to saving is to set up a separate savings account.
This way all of the pennies that you pinch have a place to go. One important tip would be to leave this account alone if possible. We can’t predict the future. So, knowing when you may need to dip into an emergency fund isn’t always possible.
However, the more you can restrain yourself from touching the account the better off you will be.
While each tip may not save you enough to make a home deposit, when combined the outcome is huge! So, dream big. Owning a house of your own may be closer within your reach than you thought.
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Maria is the founder of GoDownsize. While studying architecture in Denmark she became fascinated with designing living spaces for boats, tiny houses, RVs, and other small spaces.
She mainly writes about space optimization, interior design, and downsizing. She’s also in charge of our YouTube channel. Read more about Maria here.