3 Tips to Affording a Down Payment for Your Family’s First Home

When you’re saving up for the perfect home for your family the process can seem downright daunting. Starting to save from nothing, especially if you have some debt, can be so overwhelming that it can discourage you from following through. But you don't have to let fear win! If you make a plan and organize your finances, it is absolutely possible to save money and eventually purchase what your heart desires. Saving money is a marathon, not a sprint. Check out these tips, and you will be off to the races (and your new venture) in no time. 

Stick to a Budget

You'll want a clear view of your month-to-month expenses, so try setting up a budget. Track your paychecks and outgoing expenses such as rent, utilities, student loans, and entertainment. Seeing your expenses in this way also helps you know what you can reduce or eliminate. For example, magazine subscriptions you never read or streaming services you hardly watch are significant areas to cut down — all these little charges add up!

Also, be sure to budget in your savings. Add a line for "down payment savings" and ensure you contribute to it every time you get paid. Remember to allow yourself a little wiggle room and some spending money in your budget. You definitely want to be able to live your life, but at the same time structure yourself so you don't go overboard. It's all about balance!

Open a Special Savings Account

Scope out the banks in your area for the best high yield savings account; these accounts are fantastic because they offer a higher interest rate than regular savings accounts. Many banks listen to the voice of the customer and take public opinions seriously, so quite a few offer savings accounts with competitive interest rates.

Instead of paying for things you rarely use, take that money and put it into a designated account you reserve solely for your down payment savings. If you receive any birthday checks from grandma or monetary holiday gifts, throw those in the savings account. These gifts are "found money" that you won't really miss but that will add up in the long term.

If your job offers direct deposit, set it up so that a portion of your paycheck goes directly into savings. This way, it's done automatically, and you're not tempted to spend more than you should. If you are diligent in saving and don't touch your savings account, you'll easily be able to watch your hard work (and interest) compounding every month as your savings grow. 

Pay Off Debt

Throughout your savings journey, it's a good idea to clear out as much lingering debt as you can. Excessive credit card debt can have a huge negative impact on your credit report and therefore make it harder for you to qualify for a loan. If you can, make more than the minimum payment whenever you pay your bill, but, ideally, pay your cards off in full every month. If you're unsure of where your credit stands or how much debt you have, you can obtain a free credit report from one of the three major credit reporting agencies — Experian, Transunion, and Equifax. Your bank may also provide your credit score through its online banking platform. The less credit card debt you have, the better you look to potential lenders. You can also save the money that once went to pay your credit card bill, helping you reach your savings goal even faster. 

Saving for a down payment is not an easy task, but it can be a simple one. Eliminate as much debt as possible, cut down on unnecessary expenses, and save as much as you can, and you will be in much better shape than when you started. Once you see your hard work start paying off, you will be even more motivated to continue saving to turn your dream into reality!