The most airtight savings plans start with a budget! When you know where your money is going every month, you can see where you might be able to trim unnecessary expenses.
In fact, most homebuyers make some sacrifices in the short term to save up for a down payment. In their 2020 Homebuyer and Seller Generational Trends report, the National Association of Realtors reported that:
- More than a third of buyers age 22-39 cut spending on luxury items or non-essential items
- About a third of buyers age 22-39 cut spending on entertainment
- About a quarter of buyers age 22-39 cut spending on clothes
Smaller percentages of buyers in the survey canceled vacation plans, took on a second job or made only the minimum payments on other bills (never less than the minimum — that won't be good for your credit score).
Once you scour your budget for all the places where you can scoop up some savings, see how your total monthly savings number compares with your goal. Do you need to tweak either your goal or your monthly savings plan?
Then, automate regular transfers from checking to savings — either monthly, or after every paycheck. You want your savings building in steady increments, almost out of sight (and out of temptation). Check in on your monthly budget regularly and adjust as needed.
Finally — to accelerate saving for a house, channel any additional funds you may receive from raises or bonuses directly into your savings. It's tempting to upgrade your expenses when you start earning more money, but if you're serious about buying a house, any additional funds will get you there faster!