Buying a home is the American dream. And I’m guessing you are here because you are ready to make that dream become a reality. But first you recognize you need a plan for how to save money for a house that you can call your own.
Before you start saving, determine how much money you will need to purchase a house. This will include your down payment and closing costs to name a few expenses. For this example, let’s pretend the magic number you need to save is $20,000. The next step is to decide how much you can realistically set aside in savings each month. After evaluating your monthly spending habits you decide you can probably put away $2,000 per month. Then after some simple math you know that it will take you approximately 10 months to save for your dream house. Finally, put a plan in place to make sure you reach your goal.
$20,000 Needed / $2,000 Savings per month = 10 months of saving
There are only two ways to put away extra money for your dream home – increase your income or reduce your expenses. Ideally you could try both strategies simultaneously to speed up your savings. I’ll cover a few tips and tricks for both increasing your income and reducing expenses below.
Create a Budget and Cut Down on Expenses
I know, everyone hates the dreaded B word. Let’s talk budgets. If you are like most people, odds are you are wasting a portion of your budget each month that could go towards saving for big financial goals like buying a house.
According to a survey conducted by Hloom and shared by The Motley Fool, reported that nearly 70% of American’s admitted to wasting cash on eating out. Other categories of wasted income reported were alcohol or drinking, credit card interest, clothes, electricity and cigarettes.
If you are not sure where your money is going each month, I encourage you to sit down and categorize your spending. What you find may surprise you.
To help you with this process, you can grab a copy of our Monthly Budget Excel Spreadsheet through the subscription button below and it will be delivered to your inbox. The monthly budget is the perfect place to track major categories of spending. You will know exactly where your money is going over the course of the month. Once you track and identify wasteful spending habits, you will have a better idea on how to cut back and save for your future.
Subscribe for a limited time and pay just $2.99 per month for unlimited access to a digital collection of printable templates for buying and managing investment properties. It’s the perfect low-cost toolkit for anyone looking for a little more guidance to kick-start your passive income potential. No obligation – opt-out of the Investment Property Library at any time.
Not only will you receive the Monthly Budget when you subscribe, but you’ll have access to our entire Investment Property Resource Library. The Library is a growing digital collection of printable resources for seasoned or first-time investors and property managers.
Join the Investment Property Resource Library and Grab a Copy of Our Printable Monthly Budget Excel Spreadsheet 👇🏼
Some of the additional printable resources in the Investment Property Resource Library include:
- Sample Inspection and Inventory Record
- Sample Rental Applications
- Rental Business Financial Spreadsheet – Excel Spreadsheet
- Rental Property Cash Flow Worksheet
- Newsletter Updates
New resources are added frequently so check back often!
Start Saving with Betterment
Another fantastic savings tool that we’ve been using for years is Betterment. Betterment is an online money management tool with the goal of helping you make the most of your money. It was designed around the idea of goal-based saving. Which means if you are saving for a house you can customize your savings plan around that goal.
We primarily use Betterment in our real estate business to help save for down payments for our rental properties. We have bought at least one house a year since 2016 using this method. It’s an easy set-it and forget-it process that has helped us save thousands of dollars a year.
If you are interested in learning more about Betterment, you can read our “What is Betterment, And How to Use It” review post. Or if you have heard enough and are saying, Sign me up!, you’ll find a step-by-step guide for how to create a Betterment account here.
We like Betterment because it helps us set money aside each month to grow our savings. It automatically pulls cash from our checking account and deposits it into a separate Betterment invested savings account. So not only are we saving money, we’re also invested and earning interest and dividends over time.
We find it easier to save when our money is moved from checking and into an account that we don’t look at every day. It’s not as tempting to spend. We know that specific money is set aside for a purpose. Also it’s motivating to see it grow when it isn’t lumped together with other funds in a checking account that has daily transactions.
Start a Side Hustle
By now you have probably identified a few monthly expenses you think you could cut back on to put away some extra savings. You might even be interested in a tool like Betterment to help customize your financial goal. The next step if you really want to fast-track your savings is to start a side hustle or part-time job.
If you are already working full-time it might not be realistic to add another part-time gig in addition to the hours you are already working. However you may be able to find seasonal or contract work that isn’t as big of a commitment but still helps you save beyond what your normal income would allow. It all adds up!
As you are thinking about ways to bring in extra cash, take into consideration your interests, strengths and assets. We each have unique strengths and interests and you may be able to create your own opportunity or service offering. If you need some brainstorming ideas check out this list of 50 Profitable Side Hustle Ideas.
How to Save Money for a House as Quick as Possible
There you have it. There are many strategies for how to save money for a house but it really comes down to cutting your expenses or increasing your income (or both for faster success). Now you have a few more tools for saving and making that dream home become a reality.
Best,
