Our Blog


Tips to Save for a House

Whether you are a first-time homebuyer, or looking to upgrade, purchasing a house can be daunting. For one thing, debt can scare people. And, we all have different abilities to increase our income, and reduce our expenditures to accommodate a new expense. There is no replacement for talking to experts about your options. However, there are also a few things that everyone could afford to be reminded about when saving for a house.

Percentage Value Icon Large

1. Decide on a budget

Sure, the mortgage company or bank will be happy to tell you what you can afford, but that doesn’t mean you – with your unique dreams and your individual comfort level with debt – want to spend that amount. The general rule of thumb is that your housing costs should never exceed about 30% of your total income. However, that will vary for each person. Make sure you are clear on how much of a loan you are comfortable carrying, and then work backwards to find out how much you need to save for a down payment.

Value Icon Large Round

2. Identify your priorities

I’m going to assume for a second that saving for a house means budgeting. The thing about budgeting, however, is that it is completely unsustainable if it doesn’t take into account your personal priorities. When coming up with a budget, you need to think about regular, day-to-day you, not just ideal you. Your budget has to be tailored to your quirks, and eccentricities as much as it does to your goals if it’s going to last. If you love food and wine, for instance, then you have to build that into your budget somewhere. You can look at where you spend money, and find places that aren’t so delicious to cut back.

Understand where you are spending money – go through a few months, or even years of bank statements, and categorize your spending – then look for opportunities to cut back. Chances are, you have upgraded aspects of your lifestyle that you wouldn’t miss. If you remove too much of the things that bring you joy, you won’t maintain your budget (or you’ll hate your life considerably in the meantime).

Get to Know Your Budget Icon

3. Get creative

Often, we think of budgeting as a zero-sum game. However, if you think creatively, you can usually find a solution that helps you enjoy what you love without spending (as much) money. For instance, you don’t need to buy a new book every week – there are these wonderful places called “libraries” that give you books for essentially free. If you like ebooks and audiobooks, you don’t even have to leave your house. You can even borrow music and movies. If you love clothes shopping, you can try consignment boutiques (I recommend Red Pony http://www.redpony.ca/). If you love eating out, you can make it cheaper by not ordering a drink or a dessert, and opting for the vegetarian option. Or, check out Groupons. Or, make friends with a local Italian grandmother and just start showing up for dinner. See – creative!

Budget Icon Large

4. Automate your savings

Real money is always better than the theoretical variety. Saying you are going to put an extra $500 into your savings account a month is one thing; having it automatically transfer into a savings account is another. Set up to have the transfer automatically, so it feels like another expense you have to make room for. Bonus: think of this as practice for the new mortgage payments!

Questions Icon Large Round

5. Look for ways to add money

Typically, when we are saving for something, we focus on reducing what’s leaving our bank account. But, it’s important to also consider what you could do to increase what’s coming in. Can you take on some overtime shifts? Can you sell some clothes or things you no longer use on an app like Depop or Kijiji? Can you strap a small plow to your dog and hire him or her out to break ground on a local farm?

If you start looking for opportunities to add a little extra side income, you might be surprised how quickly a down payment comes together. And, your dog needed the exercise anyway.

Saving for a new house can feel an awful lot like sacrifice. But, when you are turning the key in the lock of your dream home for the first time, all of the hard work will be worth it. Plus, you might discover that you don’t miss the expenses you cut out, and your dogs seems to enjoy manual labour. In which case, you can start saving for a vacation instead!