Saving for a Down Payment on a Tight Budget
Tips for Saving in Small Ways
A while ago I wrote blog on budgeting for a mobile home purchase. Today, I’d like to go over practical ways to save money when you feel your budget is too tight to have extra.
Many of us dream of being home owners and are working and wishing we had a down payment to get the process started. Unfortunately, most of us do more wishing than anything and find ourselves at the end of the month with just enough.
Saving is one of the hardest things we do in our adult life, especially when we feel stretched to the limit as it is. How on earth are we supposed to save money when we barely have what we need to live from month to month?
It’s not easy and it does require some lifestyle changes and sacrifices. So on that fun note, here we go!
Do You Really Have a Budget?
One thing I often hear in speaking with people about saving money every month is, “We’re on a tight budget.” What I have discovered, however, upon looking deeper into this answer, what people really mean is, “I know we don’t have much money, so I’m pretty sure there’s not any extra.”
The first step in getting your finances on track is to actually, painstakingly, thoroughly list expenses in relation to income. Add up expenses then deduct from income. In order to do this, though, you will need to know what your average cost of gas, groceries, eating out, entertainment and other fluctuating expenses are throughout the month.
Once you have these numbers, it is time for the hard part… planning and cutting back.
Cutting the Cable
One of the biggest money gobblers is often the monthly satellite and cable bill. By cutting the cable and buying an online television service like Netflix or Hulu, you could save an average of $75-$90 a month. What’s that in a year? Yeah, about $1,000. That’s quite a bit if you’re working towards a down payment on a new home or even just want a rare family vacation.
I hate meal planning. It takes a lot of thinking and figuring and making lists. But, I meal plan anyway. Because another of the seemingly innocent expenses “eating” up your family’s money is groceries. I mean, you’ve gotta eat, right?
Too often, though, we go to the grocery store without a plan for what we will need that week, resulting in multiple trips to the grocery store and random impulse buys and wasted produce that jacks our spending up $10-$20 per week. That’s another $40-80 per month. $480-$960 per year. Can you feel yourself getting closer to that down payment?
Meal planning does not mean just dinners, but lunches, snacks, and meals for long days away from the house, too. Eating out for convenience is certainly easier but only a little. A fast food meal for a family of four costs about $7 per person or $28 total. Packing an ice chest for long days away from home is not only much heathier, but cuts that cost in half. Doing this for football games, shopping days, and road trips can leave you with at least $100 more per month in your bank account, or more depending on how often your family eats out.
But, that’s not to say you should give up eating out completely. With Groupon and other online deals, you can plan a family “eat out” night to get away from all the cooking. And by planning ahead, you will only spend what you set aside within your budget, not taking away how much you’ve determined to save for the month.
Buying in Bulk
One thing many people do not consider when meal planning is to buy in bulk. They either cannot find the extra money to put up front for a case of goods or they simply don’t realize the benefit of it. Recently I went to a “case sale” and bought ten 45 ounce jars of applesauce for $10! Applesauce tends to be about $2-3 per jar of that size, saving me $20 in just applesauce alone.
Do you see what I’m getting at? Buying in bulk when it makes sense for items your family eats a lot of will cut down your grocery bill significantly, freeing up those extra dollars where you thought they didn’t exist before.
Insurance and Cell Phones
This is not the part where I tell you to get rid of your smart phone. However, you may be paying more on your cell phone bill than necessary. If you are paying for extra unused data, or could even cut back on data usage and limit internet usage on your cell phone in wifi available areas, you could save another $10-$20 a month on another bill. In addition, contacting your cell service provider could result in a negotiation of a lower rate.
There are similar potentials with your insurance. Using the same insurer for a home and car tend to dramatically lower prices. If you aren’t yet a home owner, call around to insurers and see if you can get a better rate from another provider. You might even be surprised that your current insurer would prefer to match the rate you’ve found rather than lose a customer. Less work for you and more money in your savings as well.
Other Large Savings Potential to Think About
In extreme cases of budgets without much wiggle room, it could be time to consider looking for a less expensive (or less gas guzzling) vehicle. Trading in your vehicle on a less expensive model with lower payments could be worth the sacrifice of the lifted diesel decked out in chrome. (Or the practical, but costly, Suburban).
And lastly, how much are you spending in rent? Food and living are typically the largest bills every month, so if you’ve saved all you can on food, it might be worthwhile to consider looking for a cheaper place to live.
In today’s climate, that might not be possible, but saving $200-$300 a month in living expenses will pay off big at the end of the year in your savings account and could be just the break you needed to finally put together the down payment on your house. Moving is not easy and it’s not exactly free, but for your long term living situation, it should at the very least be considered.
You Have to Save to Save
Making a budget and negotiating lower prices and even meal planning will save you money—but only if you save it. Too often when we “save” money, we use it as an excuse to buy something else. The only way you save money is by actually setting aside money each month in a separate place that will not be spent on everyday items.
Some people prefer to physically save cash and others use a bank account. But remember, you have to save your savings in order to see the results later.