Dreams come in all sizes and varieties. Big or small, attainable or not, dreams are a doorway to our heart’s deepest wishes. Buying a car or owning a house is a dream for many. The best part? It isn’t really out of reach if you plan your finances well. Here’s what you should consider:
With the skyrocketing prices of houses and automobiles, we often look for monetary help through Home Loans and Car Loans respectively. But since banks approve loans only up to 80%-95% of the cost of the purchase, the remaining amount needs to be paid from your pocket as down payment at the time of the purchase. Depending upon the cost of the house or car and the amount of loan sanctioned, a down payment can vary and can at times be so high that you can’t arrange for the money in time. Thus, it is always advisable to plan ahead and start saving for a down payment as soon as possible. We will give you 10 simple hacks to save funds for your down payment.
- Plan a budget and live by it: You would be surprised how much you can save towards a down payment by meticulously planning a monthly budget and religiously following it. Categorise your expenses into – unavoidable, necessary and avoidable. Unavoidable expenses include house rent, EMIs, utility bills, etc. whereas necessary expenses include groceries, transportation, etc. Avoidable expenses include all the non-essential spending that you indulge in, like going for movies, eating out and frequent holidays, among others. By cutting out the avoidable expenses and controlling the necessary ones, one can follow a budget that can raise a considerable amount of savings for a down payment. Try it, already!
- Find alternatives: There is always a margin to save money by finding cheaper alternatives to your existing expenses. Instead of travelling by a bike or a car, take public transport or carpool. There are a bunch of carpooling apps that you can use to your advantage. Instead of spending on a gym, workout at home or go for a jog. By switching to economical alternatives for necessary expenditure, you can start taking baby steps towards saving for your down payment. Small savings make a big difference overtime.
- Maintain a piggy bank: It might sound childish, but saving spare change by putting it in a savings jar helps in the long run. We always end up with a handful of change at the end of the day. Make sure you put a significant amount of those coins in the savings jar. Over time, once the jar is full, deposit the sea of coins in a Fixed Deposit. You will not only save but earn interest too! It will lead to a small but important contribution towards your down payment.
- Spend extra hours working: One way to save more money is to earn more money. If you have a full time job, check if you can get paid more by working night shifts or working overtime. Alternatively, you can even opt for part-time jobs on the weekends that could earn you extra money. If you are already doing a part-time job, look for more such part-time jobs like freelance writing, teaching, etc. Set your ego aside and take up any kind of part-time job that pays you well. In the end, saving for your down payment is all that matters, right?
- Sell old and unwanted goods: Old but barely used products have a good resale value. Look around your house for unwanted and undamaged goods that can be sold for a decent price. Numerous websites and social media platforms for garage sales will help you to find multiple prospective buyers. Sell that cycle if it is unused and accumulating dust or those dumbbells lying under your bed. The income you get from selling old stuff will help you boost your savings.
- Maximise rewards: Plastic money has taken over cash and Credit Cards have become the next big thing. There are plenty of Credit Cards in the market that offer exciting rewards, discounts and cashback offers. Make sure you choose the right Credit Card according to your needs that offers plenty of rewards. Find how you can manage your Credit Card expenditure in order to attain maximum rewards and cashback offers. These small discounts and cashback can help you save for your down payment over a period of time.
- Monetise your talent: Apart from what we do for a living, everybody has a hobby that they are good at. Make sure you utilise your free time in monetising that talent of yours. If you are good at writing, look for freelance writing jobs that pay you well. If you have musical prowess, play at a restaurant or a pub and earn money out of it. If you are good at fixing things and have a steady hand with tools, then you could offer repairing services around your neighbourhood. You can earn money by tutoring kids. Numerous opportunities out there, buddy!
- Curbing expenses of a rental house: If you are living in a rented apartment, you can save a lot by not investing in it. Since a rented apartment is a temporary living space, it is advisable not to indulge in spending too much on decorating the house. Also, if you feel that the rent is high or the rented apartment is bigger than what you actually need, then don’t hesitate to move to a smaller space with a lower rent. By saving a considerable amount towards rent each month, one can save a lot more towards a down payment amount.
- Money is the best gift: If you fall short of cash for a down payment, you might request a family member to help you out with money. If you’re uncomfortable about asking relatives for money, then on occasions such as birthdays and anniversaries, request all your guests to gift you money instead of purchasing a gift item. This way you can add small amounts to your down-payment savings fund. Isn’t money the best gift?
- Invest money to yield profit: Don’t stagnate the growth of your money by just depositing it in a Savings Account, especially when you know that you can do better. Depending on what your savings goals are and your risk appetite, you should think about investing your money in anything from a Fixed Deposit to Mutual Funds. Make profit by investing wisely and thus saving more for your down payment.
Additional Reading: Financial Planning Ideas To Make Your Money Grow
Now that you have learnt about 10 important hacks to save for your down payment, start saving immediately to buy the house or car of your dreams. Explore Home Loan and Car Loan options with BankBazaar!