2 Amazing Ways that You can Save for a Down payment When You Have a Small Income
Decades ago, the United States was known for the American dream. This concept of massive opportunity that anyone could achieve anything they want with hard work and dedication. The idea that anyone could find themselves living in a beautiful home in the suburbs with a big tree in the front yard, two cars, and a white picket fence. That dream also meant that Americans would save enough money to finally move into their dream home and host their neighborhood parties and barbecues.
While this was relatively easy for Americans 50 years ago, Americans today often struggle to generate a significant savings balance. Back in 1975, the personal savings rate for an American made it all the way up to 17 percent, however in the year 2018, it dropped down to 3.1 percent month over month.
So with such a decrease in the personal savings rate in the United States, how can someone save for a house? How can they save for that all-important down payment if they are not making a lot of money?
Here are a few tips to help you save for a down payment even if you are living off of a small income.
Budget
Going over (or in some peoples case, starting) a monthly budget can save you a lot of money when you are trying to save up for your down payment. Making a detailed budget of all of your monthly expenses will give you an estimate of how much you can spend and where you can save. Remember the more you pay, the less you can keep. This means that in order to save for your goal on time you will have to make some severe lifestyle sacrifices and maybe even pick up a side hustle or more hours at work in order to make everything work in the time frame that you want it to.
Essential expenses to include in a personal finance budget are:
Monthly rent payment
Internet
Renter’s insurance
Home utilities
Groceries
Phone payment
Health insurance
Transportation, whether it be your car payment, gas, bus or train fare
Car insurance
Groceries and meals
Cancel Unused Subscriptions or Memberships
Monthly memberships are a straightforward business model for companies to charge services to the customer. They are a great fit if you are a devote customer who uses these services on a daily basis. If you find yourself rarely using these services, it might be time to cut the ties and cancel your membership.
- Gym – here you can save anywhere from $50 – $150 a month depending on where you have a membership.
- Meal kit subscriptions such can save you approximately $250 each month.
- Online streaming services – Save $10 – 100 per month
- Cable television: Save $100 – $200 per month depending on your cable package
Although affordable video streaming services are on the rise in popularity, 83 percent of households still subscribe to cable television. Most households are also doubling up on services as well, such as having Google Music, Apple Music, Spotify, and Amazon Prime music, which essentially all do the same thing. One of the easiest ways to save money is to pick to certain streaming services and stick to it. Don’t pay extra for what is essentially the same content.