If you are thinking about buying a home in 2021, one of the first things you need to do is save enough money for a down payment. That’s not an easy task, and if you’re having trouble saving money, it might be time to examine your current spending habits. Here are three common habits that can make it much harder to save that 5% to 20% for your down payment.
Habit 1: Not paying attention to your monthly expenses.
It’s easy to lose track of where your money is going every month. In fact, there might be a lot of things that you’re spending money on without even thinking about it. For example, if you still have that gym membership and haven’t been to the gym in more than a year—not counting any forced absence because of COVID-19—it’s time to cancel it and save $20 to $100 a month. Other things you may be wasting money on include:
- Cable or satellite bill
- Streaming services you never watch or listen to
- Expensive cell phone bills and/or data plans (seriously, WiFi is everywhere these days)
- Monthly subscription boxes (i.e., FabFitFun, StitchFix, BarkBox, Loot Crate)
- Digital or print newspaper/magazine subscriptions
Apps like PocketGuard or Mint can help identify monthly recurring expenses so you can get rid of them.
Habit 2: Eating (and drinking) out a lot.
You’ve probably heard this one before, but it bears repeating: eating out, especially if you are buying alcohol, is a lot more expensive than eating at home. We’re not saying you should never eat out, but make it a special occasion only. Packing a lunch when you head out for work or skipping the takeout in favor of a home-cooked meal is a great way to cut your food budget. If planning meals is hard, you can look at options like Freshly, which send you pre-packaged meals that you can heat up and cost as little as $8.50 a meal—a lot less than many restaurant meals. Other great options include buying a slow cooker or Instant Pot. With these kitchen gadgets you can dump a bunch of raw ingredients in at the beginning or end of the day and within a few hours (slow cooker) or a few minutes (Instant Pot) you have an entire meal, plus leftovers for lunch tomorrow that even a novice chef can handle.
Habit 3: Spending more on anything than you need to spend.
That’s pretty broad, so here’s the breakdown: if you don’t need to spend the extra money, don’t do it. Buy generic brands instead of brand names. Turn down your thermostat one or two degrees in the winter, and turn it up one or two in the summer to save money on utility bills every month. Don’t buy those app add-ons. Unsubscribe retail store emails that tempt you to buy something you definitely don’t need just because it’s 30% off today only. You’d be surprised at how much you can actually save by shaving just a little here and there from the margins.
Once you master your spending habits, make sure you put that money away in a savings account so you can buy that dream home. When it’s time to do that, Integrity First Lending is here to help you get a mortgage.