01/21/2022
Here are 6 tips to start saving a down payment for your future home:
1. Pay off your high-interest debts as fast as you can.
The more you pay off these debts, the more you save on interest. Also, once you get these debts out of the way, every cent you were paying them down with, can now go towards your down payment.
2. Identify areas where you spend too much.
Some of us dine out a lot, others have expensive hobbies. Whatever your money weaknesses are, identify them. Once you’ve got them identified, give yourself a much lower budget in these categories.
3. Set up automatic transfers.
Your online banking should allow you to set up an automatic transfer after payday to send a certain amount of cash from your chequing account to your savings account. Once you get used to it, you won’t even think about this money anymore.
4. Move to a more modest rental.
If you’re currently paying high rent in a large unit, consider downsizing and saving the difference in rent every month. You can then transfer the difference to your down payment savings account. Alternatively, you could get a roommate and cut your rent in half! (Remember this is only temporary)
5. Put away every bonus or unexpected money you receive.
Don’t look at this money as a reason to spend. Before you buy anything with it, ask yourself if that item is more important than being a homeowner. If the answer is no, get your bonus money into your savings account faster than you can even think about spending it.
6. Save your money in a TFSA or RRSP.
A TFSA is a tax-free savings account and just like the name suggests, you can earn interest on your savings here without having to pay any income taxes on it. With a Retirement Savings Plan (RRSP) the amount you contribute to it each year is deductible from your taxes. This helps you save money by reducing your taxable income for that year, which allows you to pay less tax now.
