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How to Save for a House Down Payment – 5 Awesome Tips

Top 5 Awesome Tips for Saving for a Down Payment

Do you want to own your own home? Well, who doesn’t? You may not be looking to buy a home right now, but you eventually will. Owning a home is a dream for most people, but only a lucky few manage to get the house they really want. You’re not alone if you’re worried about saving enough money for a down payment. Hopefully, our money-saving tips will help you come up with the amount required for a down payment on the apartment you’ve been looking for.

Your bank will finance almost 80% of the cost of the house/flat (in some cases 90%). The balance is the initial payment that you will have to self-finance. This is a substantial amount for a middle-class family. For example, if your 2-bedroom kitchen costs Rs 30 lakhs, then your bank will finance up to 24 lakhs and the remaining 6 lakhs will be self-financed.

Buying a home is a complex decision, especially if it is your first time buying a home. You will need professional help to help you get the best homes at the best price. Enough money in the bank before you go out to buy a home will give you confidence and peace of mind when choosing a home. We’re going to share some money-saving tips here to help you take control of your finances and save for that daunting down payment.

1. Track Your Spending and Expenses

Okay, we admit this is one of the most boring and clich├ęd tips for saving money, BUT tracking your spending really works. There are plenty of apps and websites out there that help you track your spending and keep a running total of the amounts you spend on specific items or categories.

This process is a revelation to many. Sometimes we don’t see the obvious until an app tells us!! You will need to cut back on luxuries and divert money into savings. Finding out where your money is going is the first step in figuring out how to keep more money in the bank.

2. Invest in mutual funds: don’t be afraid, do your research

Do some simple research on the power of compounding or the power of compound interest and you’ll understand why mutual funds are one of the most popular investment methods these days. India has, of late, seen a sudden increase in the number of people investing in mutual funds. While there are many things to consider before investing in mutual funds, we recommend that you start a monthly SIP in a stock fund that matches your risk appetite.

In general, stock funds are the best because they offer you high rates of return. These funds are also risky because market fluctuations in these equity funds can be a regular affair, but over a period of time, mutual funds generally offer better returns than the bank’s FD rates.

Go to a website called valueresearchonline.com and read about mutual funds. The final decision is yours, but we speak from personal experience: Mutual funds offer good returns on investments. There are several SIP calculators that will help you plan the exact amount of savings you need each month to meet your down payment in a given period of time. For example, if you plan to buy a house in 2020, a mutual fund SIP calculator will tell you how much money you need to start saving for your 20% down payment.

This investment method is not one of the usual tips to save money, but it is a method that helps make your money grow.

3. Make a monthly budget and stick to it

Sticking to a monthly budget will be difficult, especially if you’re used to a life of indulgence and luxury. Sticking to a strict budget is often not very fun and challenging. Remember, A penny saved is a penny earned. Having said that, allow yourself an occasional gift or two, but treat it as an exception and FOREVER offset the cost of this exception in other activities. Buckling up is now a minor sacrifice that will be quickly forgotten when you receive the keys to your new home.

4. Start saving early

Have you heard of the saying well begun is half done? One of the main shortcomings of our education system is that we are not taught financial education at an early age. We are not taught how to save and why to save. we don’t know about short and long term financial goals.

Although our mothers always insist on saving, most of us lack proper financial education. Start saving early, dedicate at least 15-20% of your salary savings each month. Start your first job when the responsibilities are less. Some people save up to 50% of their savings while they can. Among numerous tips to save money, this is the most powerful.

The benefits of starting to save early is that by the time you turn 30 you will have enough money for a down payment on your house.

5. Look for ways to increase your income

For most of us middle class salaried people, there is only one source of money income (ie monthly salary). At most, both husband and wife are working, so in such cases there are two sources of income. The number of ways that money leaves is always greater than the number of ways that money enters. Think of your income and expenses as an upside down funnel. Every successful person understands that additional sources of income must be created to save money.

There are many ways through which you can create an alternative source of money. You may consider starting a blog, YouTube channel, or just affiliate marketing. You can start an online store and earn a lot of money if you have done proper research. There are various online videos through which you can learn about online business.

You do not need a considerable investment to start any of these activities. All you need is a laptop and some time. There is a TedX video on YouTube that says that you only need 20 hours to learn a skill at a satisfactory level.

Your budget has two parts: money coming in and money going out. You will get the best results if you make improvements on both sides.

Open a savings bank account for a down payment and consider it untouchable. Barring a major emergency, don’t even toy with spending that money until you’re ready to buy a home. It’s easier to keep a down payment fund off limits if you set up a separate account dedicated solely to this purpose.

Treat this bank account like a black hole with light coming in but nothing coming out.

Here is a video with some more tips to save money

https://www.youtube.com/watch?v=PYUUCA0MpD8&t=141s?rel=0

Conclution

We hope these tips for saving money for a down payment on your home have helped. Saving for a down payment on your house is difficult but not impossible. There are other things you can do to get financial benefits. For example, Pradhan Mantri Awas Yojana is a great scheme that has benefited millions.

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