One of the best things about saving for a new home is there are many paths you can take to come up with the funds. Once you’ve learned what you need to do to save for a down payment, you’ll find it easier to save for other big purchases. If you’re motivated to make savings strategies a part of your life, the sky is the limit for achieving what you want.
1. Sort Out Your Priorities
When you decide to save for a major purchase, you will need to give some serious thought to whether certain parts of your lifestyle or saving are more important. In many cases, it’s a matter of deciding what’s most important and making changes in the form of cutting back on certain things.
Consider putting together a budget so you can decide where to best make changes to save the money you need. Once you’ve created a budget, you can start taking steps towards better savings. Our monthly budget worksheet can be a great template for this.
2. Find Ways to Cut Costs
There are ways you can cut a lot of your costs with minimal effort. Here are some suggestions:
- Find free or low-cost activities, and eat at home more often
- Take your vacations closer to home – the Canadian Rockies offer a lot of opportunities
- Cut back on how many new clothes you buy by selecting pieces to complement your existing wardrobe, rather than replacing everything
- Watch more movies through streaming services, rather than going to movie theatres
- Check out more books from the library or purchase in ebook format
3. Take Care of Your Credit Card Debt
Credit card debt is a major strain on your ability to save because of all the interest you must pay. Consider the following to help you:
- Pay off the smallest high-interest debt first
- Use the minimum payment to pay off your next smallest debt
- Both of these payments will play a major role in reducing what you owe overall
Paying off your credit card debts first will put you in a better position to meet the requirements for a mortgage.
4. Become a Single-Car Household
You can save thousands of dollars yearly by sharing a car with your spouse or partner. There are substantial savings that come from eliminating the insurance, maintenance, gas and car payment costs for one of your vehicles. Consider putting the money you save aside in a special account that you don’t take regular expenses from.
Here are some options to consider:
- Ride a bicycle to and from work
- Go by carpool with other drivers
- Take public transit or a rideshare service
- Walking, if the weather allows
- If you’re still renting and won’t have a down payment saved for a while, consider temporarily moving into an apartment or house closer to work
5. Maximize Your Options for Savings
Start putting any extra money you get into a separate account. Examples of extra money you can start saving include tax refunds, sales commissions that go above your usual amount, and bonuses.
If you have an RRSP, you have a helpful option awaiting if you’re buying a home for the first time. Look into your eligibility for the Home Buyer’s Plan.
Consider taking out a tax-free savings account that will allow the money you’re saving for a down payment to earn interest that won’t be treated as taxable income. If your down payment money goes into an account that’s tax-free, you’re likely to see the funds you need grow more quickly.
Once you’ve saved money for your down payment, you’ll be well on your way to enjoying the home of your dreams. There are few things more fulfilling than having a home that’s totally yours to enjoy, so any steps you can take to make that dream a reality are worth the effort.