We understand that saving money is simple in concept, but hard in practice. That’s why so many people struggle to do it and it ranks among the top obstacles to homeownership. But with a careful approach and a critical eye on your own financial habits, you can make it happen and be one step closer to your goal of homeownership.
Income minus expenses = savings.
You don’t need an advanced economics degree. The simple equation is: increase income, reduce expenses, and save the remainder. Of course, if your income doesn’t cover your expenses, there’s no money to save and it can feel like the end of the equation instead of the start. But there are ways tweak the formula in your favor:
- Boost your income: Can you get more shifts at work? Can you make the case for a well-earned and overdue raise? If not, you may have to get a little more creative. Consider working for yourself by taking on freelance projects or a side hustle.
- Reduce your expenses: If boosting income is out of reach at the moment, reducing spending is something we can always do ourselves! A bit of self-reflection, a budget and the discipline to stick to it is all that it takes to get started.
A side hustle is a great way to make extra money.
Harnessing idle time in your schedule to earn extra income can accelerate your path to homeownership. Think about what you can commit to it – part time, nights, weekends, etc. – and what style of “hustle” interests you, then go after it:
- Can you freelance in your core line of work? Just make sure that it’s ok with your employer as we don’t want you to jeopardize your primary income for a side hustle.
- Or lean into your passion – Crafting on Esty, wedding photography, event work or handyperson services, if you’ve got the tools.
- Or take on something entirely new – dog walking, lawn mowing or a few shifts a week at a local restaurant.
The key is to earmark the earnings from your side hustle exclusively for your down payment. Make regular deposits into a savings account established for the occasion and watch your nest egg grow.
While reducing expenses – review spending and keep chipping away.
Review your monthly spending to reduce expenses where you can. Common ways that may help you include spending less on credit card interest or fees, canceling subscriptions you no longer need, or negotiating down recurring costs where there may be some wiggle room (think your cable or phone bill).
Take the next step to managing your money for a down payment
Now do the math. At this rate, how many months will it take you to save your down payment goal? If the answer is “too long,” you have a few options. You can make more time for your side hustle. You can go leaner on expenses and sacrifice in the short term for the long-term goal. Or, perhaps, you need to revisit the goal. The average down payment for a first-time homebuyer is 8%*, far lower than the 20% that many people still believe.
