Top 5 Amazing Tips to Save for a Down Payment
Do you want to own your own home? Well, who doesn’t? You may not be looking to buy a home now, but eventually you will. Owning a home is a dream for most people, but only a lucky few manage to get the home they really want. You’re not alone if you’re worried about saving enough money for a down payment. Hopefully, our money-saving tips will help you come up with a down payment on the apartment you’ve been looking for.
Your bank will finance almost 80% of the cost of the house/flat (in some cases 90%). The balance is the initial payment that you will have to self-finance. This is a substantial amount for a middle class family. For example, if your 2 bedroom kitchen costs 30 lakh rupees, then your bank will finance up to 24 lakh and the remaining 6 lakh will be self financed.
Buying a home is a complex decision, especially if it is your first time buying a home. You will need professional help to help you get the best homes at the best price. Having enough money in the bank before you go out to buy a home will give you confidence and peace of mind when choosing a home. We’re going to share some money-saving tips here to help you take control of your finances and save for that daunting down payment.
1. Keep track of your spending and spending
Okay, we admit this is one of the most boring and cliché tips for saving money, BUT tracking your spending really works. There are a plethora of apps and websites that help you track your spending and keep a running total of the amounts you spend on specific items or categories.
This process is a revelation to many. Sometimes we don’t see the obvious until an app tells us! You’ll need to cut back on luxuries and shift money toward savings. Finding out where your money is going is the first step in figuring out how to keep more money in the bank.
2. Invest in mutual funds: don’t be afraid, do your research
Do some simple research on the power of compounding or the power of compound interest and you’ll understand why mutual funds are one of the most popular investment methods these days. India has seen, in recent times, a sudden increase in the number of people investing in mutual funds. While there are many things to consider before investing in mutual funds, we recommend starting a monthly SIP in a stock fund that matches your risk appetite.
In general, stock funds are the best as they offer you high rates of return. These funds are also risky because market fluctuations in these equity funds can be a regular affair, but over a period of time mutual funds generally offer better returns than bank FD rates.
Go to a website called valueresearchonline.com and read about mutual funds. The final decision is yours, but we speak from personal experience: mutual funds offer good returns on investments. There are several SIP calculators that will help you plan the exact amount of savings you need each month to reach your down payment in a given period of time. For example, if you plan to buy a home in 2020, a mutual fund SIP calculator will tell you how much money you need to start saving for your 20% down payment.
This investment method is not one of the usual tips for saving money, but it is a method that helps your money grow.
3. Make a monthly budget and stick to it
Sticking to a monthly budget will be difficult, especially if you’re used to a life of indulgence and luxury. Sticking to a strict budget is often not much fun and is challenging. Remember, A penny saved is a penny earned. Having said that, allow yourself an occasional treat or two, but treat it as an exception and FOREVER offset the cost of this exception in other activities. Buckling up is now a minor sacrifice that will be quickly forgotten when you receive the keys to your new home.
4. Start saving early
Have you heard of the saying well started is half done? One of the main deficiencies of our educational system is that we are not taught financial education at an early age. We are not taught how to save and why to save. we don’t know about short and long term financial goals.
Although our mothers always insist on saving, most of us lack the proper financial education. Start saving early, put at least 15-20% of your salary savings each month. Start with your first job when the responsibilities are minor. Some people save up to 50%n of their savings while they can. Among numerous tips to save money, this is the most powerful.
The benefit of starting to save early is that by the time you turn 30, you’ll have enough money for a down payment on your house.
5. Look for ways to increase your income
For most of us middle-class salaried people, there is only one source of money income (ie monthly salary). At most, both husband and wife are working, so in such cases there are two sources of income. The number of ways money goes out is always greater than the number of ways money comes in. Think of your income and expenses as an upside down funnel. Every successful person understands that additional sources of income must be created in order to save money.
There are many ways through which you can create an alternative source of money. You may consider starting a blog, YouTube channel, or just affiliate marketing. You can start an online store and make a lot of money if you have done proper research. There are various videos online through which you can learn about online business.
You do not need a considerable investment to start any of these activities. All you need is a laptop and some time. There is a TedX video on YouTube that says that you only need 20 hours to learn a skill to a satisfactory level.
Your budget has two parts: money coming in and money going out. You’ll get the best results if you make improvements on both sides.
Open a savings bank account for the down payment and consider it untouchable. Barring a major emergency, don’t even toy with spending that money until you’re ready to buy a home. It’s easier to maintain an off-limit down payment fund if you set up a separate account dedicated solely to this purpose.
Treat this bank account like a black hole where light enters but nothing comes out.
Here is a video with some more tips to save money
https://www.youtube.com/watch?v=PYUUCA0MpD8&t=141s?rel=0
conclusion
We hope these tips for saving money for your home down payment have helped you. Saving for a down payment on your house is difficult but not impossible. There are other things you can do to gain financial benefits. For example, Pradhan Mantri Awas Yojana is a great scheme that has benefited millions.
Also listen to the Podcast