April 15th 2016
If you are like me, in your mid to late twenties, trying to save for your first home, you will understand how hard this can be. How do people do it? It is a difficult balance between spending money to commute to work, a part time job on weekends, paying rent and living expenses, all whilst trying to do the smart thing and put some money aside each pay for retirement. Where do we leave ourselves room to save for a down payment on our first home?
Well, if you are even more like me, you moved into your parent’s basement with your significant other while you both set your sights on home ownership and (once again) living on your own. That meant learning when to say no to extravagant events and trips that we were invited to attend and focus on the end goal: a hefty down payment and money left over to furnish our new digs with a budget for all the “unexpected” costs that come with new home ownership.
I will say, that at various points along this journey of “living in the dungeon” a.k.a my parent’s basement, it’s been hard to think positively about saving when we just want to spend some money on a fancy vacation or weekend getaway. However, by keeping the end goal in mind, we are able to still enjoy the life we want to lead, while putting aside as much money as possible until we move into our new home.
My number one tip for anyone looking to buckle down and save is to set up automatic transfers at your Credit Union! If you have online banking (or can call into your branch), set up a transfer that will run automatically each time you get paid straight into a savings account. With this system in place, you will know how much you have left for your own personal expenses and spending habits, while continuing to work towards your target dollar amount that you would like to save.
The second piece of advice I would give is, if you are able, move in with a family member or friend where rent will be low (or free!) while you wait until you are ready to move into your first home. You will be shocked by the amount of money that you can save each month by cutting back on your living expenses. Put the money you saved into your savings account, out of reach to you until you need.
Third, but definitely not final, is speak with a financial advisor about how much you will need to save to get the home you want. They can talk to you about opening up the right savings account for what you are looking to buy and tell you all about First Time Home Buyers advantages using your RRSP vs. a TFSA as well as help you plan your budget based on your timeline. Double bonus, if you can find an advisor who is free (like ours is) even better!
As I continue down my path of saving, I hope I have provided you with some helpful tips to getting you on track to saving for that big purchase!
Do you have tips on how you saved for your first home? Let us know!
Written by Amanda Perkins