How to Start Saving for Your Down Payment

by Lena and Rich Benenati 09/27/2020

Image by Gino Crescoli from Pixabay

Although a 20 percent down payment is no longer the norm, you still need to save a considerable amount to cover all the initial costs of buying a home. With median down payments at seven percent, a $250,000 home will require a down payment of $17,500. Plus, you need to have funds for all the closing costs, including title fees. Thankfully, to get started in putting away that $20,000, or more, you do not have to make monumental changes to your finances. Just these small ones will do — and it can be a lot of fun, too!

Tuck Away All Your Fivers

To start your savings off right, you can tuck away every five dollar bill that comes your way. Simply put the fivers in an envelope as they appear, then deposit the whole lot at the end of the week. If you do not regularly carry cash, however, you can adjust this method to transferring the five bucks over to savings anytime your balance ends in a 5 or 0. That’s it. By the end of the year, you will marvel at how many fives have piled up.

Get Rolling with a Nickel

To take a progressive savings approach, all you need to start with is a nickel. On day one, take a nickel from your pocket and plunk it into a jar. Then, on the next day, put in 10 cents, then 15, then 20, and continue on in this manner until the end of the year. By day 365, you will only have to put in $18.25 to complete this savings plan. You can also switch it up a bit by working from $18.25 and moving downward or alternating from either end of the scale with 5 cents here, then $18 there. At the end, you will have more than $3,000 in savings without batting an eye.

Round It Up & Into Savings

Another painless way to save is by rounding up each and every one of your purchases, putting the remainder into savings. Although you will only put away 99 cents at most each purchase, the funds will add up quickly and leave you with plenty in the account by year’s end.  

Chart Out a Sinking Fund

If you just love to see your progress in action, chart out a sinking fund to track your savings. Simply print an outline of a house and create a lined chart up the side, starting at zero and moving all the way up to your savings goal. Then, fill in the home from the bottom up as you deposit money into savings. To figure out how much to save in your sinking fund, just divide your goal by the number of months you want it to take.

Since these saving methods do not require much of a lifestyle change, they can be a lot of fun to complete, especially as you see your balance grow. Just keep making small adjustments to your finances to continue to build your savings and your dreams of homeownership will come into focus before you know it.

About the Author
Author

Lena and Rich Benenati

Lena and I have been helping our clients buy and sell real estate since 2002, marking over 26 years of combined market experience! We will earn your trust by utilizing proven marketing strategies, certified professional negotiating skills, and targeted technology. Add to this our local market insight and consistent follow up, and it adds up to a great experience for you! A family owned and operated business, we strive to be your trusted adviser, helping you navigate the home buying and selling processes. It is our mission to combine our extensive experience and superior customer service together with a positive attitude to ensure that you enjoy your buying or selling experience. Our customer service extends beyond the sale, providing you with useful information regularly and connecting you with the resources you need, when you need them. This is why an exceptionally high 80% of our business is referred to us by our past clients. We look forward to exceeding your expectations, in English or Spanish as you desire. Lena & Rich, a team you can trust, for everything real estate.