The best ways to save for a house
There are many ways to make money after moving into your new home. Many first-time homebuyers will Airbnb out spare rooms in their home, or they’ll find extra ways of making money through the gig economy or apps.
But even with the right app and some extra income, you still need your down payment money up front — and there are some great hacks to saving for a new home.
1. Create a monthly budget and automate payments to savings
We’ll get the boring yet important tip out of the way first:
YOU NEED A BUDGET.
Cut the fat from your expenses. It isn’t sexy, but it works. Eat out less, purchase fewer items that aren’t “essential,” and while we’re not advocating for zero fun, it’s important to minimize the $5 lattes or $14 cocktails.
Make saving easier than spending. Out of sight, out of mind, right? Set up an automatic savings account. If you’re paid via direct deposit, send some of that money to an account that isn’t your checking. Use micro-savings apps like Acorns or Digit. The harder it is to find and spend, the better.
2. Contribute less to your 401k
Say what? Taking money away from your savings can seem scary. But, your new home isn’t just a house, it’s an investment — and the only investment you can sleep in.
From June 2016 to June 2017, home prices rose by an average of 5.8% across the United States. That short-term ROI isn’t too shabby.
3. Downsize for a short time
Odds are that you’re currently renting a place. No matter how much you love it, if you’re thinking about home ownership, you clearly don’t want to live there as badly as you want own.
Downsizing your current place, or dealing with a roommate for a little bit, will quickly help you save for a house. Even if you’re just paying $200 less a month in rent, it adds up to $2,400 more for your down payment each year.
4. Sell things you don’t need
RemeMake eBay, Craigslist, and OfferUp your new best friends. Most people have objects laying around that go unused. There’s bound to be someone out there who is willing to pay for your stuff, right?
Not only will you make some money selling things you don’t need, but you’ll also get rid of items that will inevitably have to be moved to your new home.
5. Invest responsibly and over a longer period of time
If you’re investing (and you should be), you might need to make some changes to your habits.
Instead of putting your money in riskier, short-term investments, move it to long-term, safe investments. Some longer-term investments (think one or two years) should yield you some extra cash that can be put down when it comes time to buy a home.
Some longer-term investments (think one or two years) should yield you some extra cash that can be put down when it comes time to buy a home.
6. Open a high-yield savings account
Money that’s sitting around in your checking account isn’t going to do you any good. Without any effort, that money can be making you even more money.
High-yield savings accounts are exactly what they sound like – accounts where you save your money and get a nice return. It’s easy to find these accounts. While you won’t be making life-changing sums of money, you’ll be making enough to help put a dent in your down payment.
7. Consider a Certificate of Deposit
A certificate of deposit (CD) is a deposit where you can’t touch your money until it matures. In return, you’ll get a guaranteed percentage back on your investment.
CDs can range from a few months to multiple years, so you should pick one based on your timeline for buying a home. Regardless of your situation, this is something you should do right off the bat with any money you have that isn’t invested.
This article originally appeared on OpenListing.com