One of the biggest financial goals that Canadians have is to purchase a home. In fact, according to a recent survey of 1,200 Zoocasa readers, 76.1% of our respondents said owning their own home is important to them. This can seem like an unattainable goal, especially when you are making monthly rent payments.
Fortunately, there are simple ways to save money for a downpayment on a home even if you’re currently renting.
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Start Tracking Your Spending
Before you can start to save money, you need to track your spending to identify where your money is going each month.
Consider entering all the money you have coming into your account and all of your expenses into a spreadsheet or app. Do this for a few months to determine where the majority of your money goes. Identify any unnecessary expenses that can be eliminated, and put the money towards a down payment instead.
Open a Separate Savings Account for Your Down Payment and Automate Your Deposits
It can be helpful to have a separate savings account so that you’re not tempted to dip into it for other expenses. Additionally, many online payroll systems will let you add multiple accounts for your salary to be deposited in. Consider setting it up so a portion of your pay will automatically go into this savings account each month. Making regular deposits will help you stay on track with your goal of saving for the down payment.
The Government of Canada has also recently introduced a First Home Savings Account for first-time buyers, allowing you to save up to $40,000 tax free towards your first home. This can be a great tool for those saving up for a down payment on their first home. Read more about it here.
Create a Budget and Stick to It
A budget will allow you to plan your expenses and allocate your monthly income properly. Once you’ve tracked your money in vs. money out for a few weeks, you should be able to determine how much money you should allocate for the “need to have” items as opposed to the “nice to have”. Budget for the non-negotiable expenses like your rent payments, utilities, groceries, and transportation and determine where you can cut back in other areas of your spending.
Cut Back on Luxuries and Look For Ways to Save Money
Every little bit counts when saving up for a down payment, so make sure to look for ways that you can cut back on the luxuries in your life. You can also try negotiating rates with your utility providers and shifting some of your spending to cheaper alternatives.
For example, multiple streaming services, expensive tech items like new cellphones, and eating out can all add up quickly. Can you cook at home a few nights a week and hang on to your current, older cellphone for another year? This can result in thousands of dollars in savings per year.
Consider Taking on a Side Job or Selling Unwanted Items
If you’re having trouble cutting back on expenses or want to accelerate the process, consider taking on a side job or selling unwanted items that are cluttering up your living space. There are many freelancing opportunities online that will allow you to have a flexible schedule and also make some extra money that can then go directly into your down payment savings.
Remember to keep in mind that saving for a home is a marathon, not a sprint. You’ll need to be dedicated and consistent with your approach if you want to reach your goal of purchasing a home. With the right mindset and strategies in place, you’ll be able to save up for a downpayment and reach your goal of becoming a homeowner. Good luck!
If you’re looking into purchasing a home in the near future, give us a call for more expert advice and to discuss your questions and goals.
