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Although a 20 percent down payment is no longer the norm, you still need to save a considerable amount to cover all the initial costs of buying a home. With median down payments at seven percent, a $250,000 home will require a down payment of $17,500. Plus, you need to have funds for all the closing costs, including title fees. Thankfully, to get started in putting away that $20,000, or more, you do not have to make monumental changes to your finances. Just these small ones will do — and it can be a lot of fun, too!
To start your savings off right, you can tuck away every five dollar bill that comes your way. Simply put the fivers in an envelope as they appear, then deposit the whole lot at the end of the week. If you do not regularly carry cash, however, you can adjust this method to transferring the five bucks over to savings anytime your balance ends in a 5 or 0. That’s it. By the end of the year, you will marvel at how many fives have piled up.
To take a progressive savings approach, all you need to start with is a nickel. On day one, take a nickel from your pocket and plunk it into a jar. Then, on the next day, put in 10 cents, then 15, then 20, and continue on in this manner until the end of the year. By day 365, you will only have to put in $18.25 to complete this savings plan. You can also switch it up a bit by working from $18.25 and moving downward or alternating from either end of the scale with 5 cents here, then $18 there. At the end, you will have more than $3,000 in savings without batting an eye.
Another painless way to save is by rounding up each and every one of your purchases, putting the remainder into savings. Although you will only put away 99 cents at most each purchase, the funds will add up quickly and leave you with plenty in the account by year’s end.
If you just love to see your progress in action, chart out a sinking fund to track your savings. Simply print an outline of a house and create a lined chart up the side, starting at zero and moving all the way up to your savings goal. Then, fill in the home from the bottom up as you deposit money into savings. To figure out how much to save in your sinking fund, just divide your goal by the number of months you want it to take.
Since these saving methods do not require much of a lifestyle change, they can be a lot of fun to complete, especially as you see your balance grow. Just keep making small adjustments to your finances to continue to build your savings and your dreams of homeownership will come into focus before you know it.
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