Lately, I have been looking for new strategies to help increase the amount of money we are saving. This has been on my mind a lot lately, particularly since our car needed repairs and we could be headed towards having to buy a new vehicle. While, I can’t say for sure when that time will come, I figure it is better to be prepared and work towards saving as early as possible for a down payment. While you may have the goal in mind of saving for a down payment for a mortgage, for example, finding ways to increase the the amount you are saving is always a good plan.
Since, the value of the down payment determines the how much our monthly car or mortgage payments are likely to be, as well as how many months it will take us to pay back the loan in full, I am eager to put some new methods into action. I have also realized that it is a good idea to plan a head and use multiple avenues for savings, that can work together to add up to a decent sum of money when we need it the most. Here are 5 methods for saving money towards a down payment, that I hope you will find valuable.
5 Ways to Save for a Down Payment
1) Placing Money Aside Regularly
Implementing a schedule of putting aside a bit of extra money each month, each week, or even a little change at the end of each day is a good routine to get into. Follow through is important as well and striving to stick to this schedule is likely to be key to your success. Even if it isn’t a lot of money to start, as long as you are saving regularly this is a good habit to keep up with. Whether you collect your money in a ‘piggy bank’ or another place for safe keeping, that is up to you.
You may also choose to open up a new savings account at your financial institution. The lack of tax-related consequences with these accounts mean that TFSAs can be actually best suited to short term financial goals, such as car loans. This is because you can withdrawn the funds at any time and do not have to worry about being charged tax. In order to reach you down payment goal, this new account should only be used for this purpose and none other, unless it is an emergency.
2) Putting your Tax Refund to Work
You can also decide to use the money you have received back from your tax refunds as an a strong addition to your down payment funds. This is a great way to get more value from your tax refund, because after all, this is money you have worked hard for from the start.
3) Cutting Down on Luxury Items and Non-Essentials
I have talked about this method before and while it seems like an obvious money-saving technique, it can actually be quite difficult to do. To make this strategy a bit easier, you can start by going back to your budget and pinpointing exactly where every dollar of your money is going.
Are there any holes in your finances, where your money is being wasted? Are some of these items and services ones you can go without (at least for a while)? You can then put some of the extra money you have each month into your down payment savings.
There are many ways to try and save, here and there. Below are some ideas of potential areas of where you may be able to cut back. Some of them, I have been able to put to good use so far and believe me, I have already noticed a difference!
• Eat out less, grocery shop more efficiently – choosing less expensive brands, when you can.
• Bundle your services for possible discounts and cut back on unnecessary services (phone, internet, cable).
• Conserve energy by turning off electricity, water, gas, when not in use.
• Find someone to carpool to work with, if possible and save on gasoline/car repairs.
4) Taking Advantage of Deals/Discounts
Another way to save a few extra dollars is to take advantage of coupons and other discounted offers for the various products and services you require. You can use coupons for groceries and even as other retail and service locations.
There are various companies that specialize in a wide range of discounted services and programs, such as Groupon. You can check on their site as well as having daily/weekly discount notifications sent directly to your email address.
5) Selling Used Items
Taking a look around the house, are there items that you don’t use and could consider selling? These items could come in the form of furniture, electronics, gently used clothing, or power tools and machinery that you no longer use. You can then turn these unused items into cash for your savings.
There may be other individuals who would appreciate and get more use out of these items, while also looking to buy previously used items that are less expensive versus buying brand new. Places you can consider selling your items, include online sites such as Kijiji and eBay, as well as consignment stores and the classifieds section of your local newspaper.
As some of these savings strategies are already present in my repertoire (such as the TFSA), I plan to add these new ideas to my list and put them to work, wherever I can. I believe that the more opportunities to save, the better and the more effectively I will be able to grow our down payment fund – and be ready when the time comes to finance our new car or home. At the same time, try to have fun with it so you don’t put too much pressure on yourself. Saving is a journey not a race.