Why is it that millennials cringe every time someone suggests investing in a home? It seems like bloggers everywhere are trying to discourage young, hopeful homeowners from ever being able to afford one. Are they really destined to rent less-than-ideal apartments or live to be house-poor for the rest of their lives? We beg to differ! In fact, with a few helpful hints, a healthy down payment could be right within your grasp.
Whether you’re saving for a holiday or for a home, it all starts with a few dollars tucked away. One of the easiest ways to do this is to make your savings automatic. With every paycheck you receive, put away 1% into a savings account and live off the other 99%. One percent may not seem like a lot at the time (and really, would you even notice it?), but it can add up to a substantial sum in the long run.
Another strategy for putting money away is to be more mindful of where you’re spending it. Now that you can spend all of your hard earned dollars with the tap of a card, it sometimes seems a little too easy to splurge. The solution? Visit your local ATM a whole lot more. Well, technically that’s not a solution, but it will help you pay in cash, which can significantly reduce your spending and help you enjoy your purchases more.
Finally, if you’re adulting like a boss with the above, try tapping into your inner child and pull out that old piggy bank. Transform that annoying jingle in your pocket into a small fortune in a jar by storing any change you accumulate throughout your day. In fact, you might be collecting more nickels and dimes now that you’re paying with cash.
This might seem like a no-brainer, but living within your means actually isn’t always simple. In fact, some people don’t even have a budget! If you aren’t sure how much you make and how much you currently spend, how could you hope to start saving up for a down payment? Luckily, creating a budget isn’t all that difficult with a little bit of tracking.
That being said, making a budget and actually adhering to one are two totally different things. If you pay for your expenses with a credit card and can’t help but rely on them, stop using them entirely. Use cash or your debit card at all times because if you overspend, at least you’ll simply run out of money instead of dragging yourself into debt.
It might seem strange to spend money when you’re trying to save money, but reducing your debt is essential when preparing for homeownership. Of course, not all debt is created equal and you shouldn’t just haphazardly toss money at all of it. Do your research and choose wisely so that you can improve your financial position before jumping on the homeowner bandwagon.
Paying off a small portion of your debt can benefit your credit score, which is one of the first and easiest ways that a bank or broker will use to determine your ability to afford a home. If your credit score is low for any reason, you can expect a lender to want to charge you premiums to protect themselves from the risk you pose financially. This means that they will charge you more in interest than someone else who maintained a better credit score for the same amount of money! So do yourself a favour and start paying off some of that debt!
So you see, saving up for a down payment doesn’t mean you have to give up all the good things in life. Really, if you can fit that weekly $32 brunch outing into your budget, we say go for it! Take these tips to heart and you’ll be well on your way to owning your very own home sweet home!
If you’re ready to explore your options, get started with the Canadian Home Buyers’ Guide! It’s fast, free, and incredibly easy to use. Visit us at https://skhomebuyersguide.ca/ to start your journey to homeownership!