How to save for your home down payment is a calculating conscious task. First get your financial house in order by lowering your debt to income ratio. Then you need to set a plan in place to save up for your home down payment if you don’t have a family member contributing to your purchase. Once you get paid your money has several places to go. The following plan works no matter how much you make.
Home Down payment Savings Method:
- You have to understand the method of (1) saving, (2) bills, (3)fun. Right now you probably have the method bills, fun, savings or just bills and fun in place.
- Breakdown how much goes to each category and to determine this consider saving one hour of what you get paid per day. For example, if you make $30 per hour and get paid bi-weekly that’s $300 ($30 per hour times 10 days).
- Next pay your bills with the remaining.
- Whatever’s leftover you can use for fun.
If you feel saving one hour of your pay is too much or too daunting start off with less but do work your way up to at least that amount. If you find it doable then considering saving two hours of your pay and putting one hour to savings and the other hour to your home down payment. Remember not only will you need your home down payment but you will have to show the bank that you have savings after you purchase the home. Understand that practice makes perfect just like exercising daily. Also consider attaching a timeframe to your savings plan. When finding it difficult to stay on track it’s better to start off with a short timeframe then work your way up to a longer period. To not be tempted to spend your savings place it in the highest yield CD you can find or a investment account. Just make sure you can get the fund with the least amount of financial penalty when it comes time to use the funds. Habits are formed by repetitive action and after a while you’ll find this method of handling your finances to be a great way to live. For example once you acquire your home you might use this method to say for your vacation, retirement or other big purchases that may come your way over time.