Are you tired of renting? Rental prices are rising and homeowners everywhere are enjoying a steady increase in property values. If you are thinking about buying your first home, the time is now. Building equity in a home you will one day own makes much more sense than throwing your money into a rental property.
However, renting can be a great way to start out in adult life as a transition into buying your own property. Learning to save while you are paying rent can be a difficult thing to do when you are paying the high amount of rent that is present int the market today. With some strategic financial planning, you will be able to save for a substantial down payment while renting your current home or apartment.
Cut down on your expenses
When you are trying to save, it is important you make sure you are not overspending. There are so many things we purchase each month that cut into our ability to save. In our digital world, it is easy to have subscriptions to many different streaming services without seeing the big picture. Pick one or two streaming services instead of having five or six. This could save you hundreds of dollars every year.
When you are buying clothing, make sure you stay away from designer brands. There are stores that will provide you quality outfits at a fraction of the price of big designer stores. Try to cut down on eating out. This is one activity that is taking more money than you might know. It can be easy to spend $300 dollars a month just eating fast food for lunch each day. By packing a lunch instead of eating out, you can save nearly $5,000 a year.
Find a way to earn additional income
When you work a 9 to 5 job, there is a lot of time left in the day to earn a little extra income. There are many great ways to earn money today with the outlets that are available to us. Being an Uber driver is a great way to set your own hours and also make a lot of extra money on the weekends when party-goers need a ride home from the bar. If you are good at writing, you can earn money on your own terms by writing articles online. If you like dogs, you could start a dog-walking business. The possibilities are virtually endless.
Sell items around the house that you don't use anymore
As we grow older, there are hobbies we just aren't as interested in anymore. You may have spent a few thousand dollars on a beautiful camera back in college but now you just don't have the time to take pictures with your busy work schedule. You can turn this dusty camera into savings for your down payment. You will be surprised at the amount of stuff laying around your house that can be turned into cash with a yard sale.
Deposit into your savings account every paycheck
You will need to fine tune your budget when you are trying to constantly add money into your savings account. You need to make sure you can still pay all your bills after a substantial amount of your money is being deposited into your bank account. Once you have decided what amount of money you can save, you can contact your bank to set up an automatic deposit into your savings account each time you have a direct deposit from your employer. This will automate your savings and help keep your savings on autopilot.
When you are trying to save for a down payment, you need to be in it for the long haul. You will want to save for at least a year. If possible, you should strive to save for even longer than that. The more money you are able to put down on a house, the better rates you will get. You will need to make sure you can stay consistent over time in order to save up a substantial amount of money for your down payment. Saving a great deal of money over a short period of time will never add up to saving a moderate amount of money over a much longer period of time.
Neal Johnson is a CMCA, CRB, CNE and GRI-certified, licensed real estate broker at Network Real Estate, which has exclusively served a high volume of property sales and purchases in the greater Wilmington area for more than 30 years. With three offices at College Road, historic downtown Wilmington and Pleasure Island, Network’s brokers are widespread and well-versed in this marketplace, making Network a preferred real estate company for first-time homebuyers and beyond.