How to Save Your Downpayment

 

I was scrolling through Instagram the other night and I came across a friend's story; if you aren't familiar with Instagram or Insta-Stories, it's basically a temporary (24 hour) post and you can sit there and scroll through 100 of them without blinking an eye...anyway, this story read something like "do I buy the Starbucks or cool it with the spending". Obviously this prompted not only the realtor in me, but also the saver and mom side of me. I get it, I am a new mom and what kind of wisdom could I possibly have, this early into the game, but trust me, I have been a "mom" long before I had a child. So I sent a direct message to this friend and I said, "listen, cool it with the Starbucks, save that cash, and buy an asset, like say...a home and let me help you do it!"

The conversation went on for a little bit, and I broke down some saving tips for this friend to help explain the broader idea of saving dollars here and there and ending up with a larger sum. 

Skip to the next day, listing to a book by Rachel Hollis, and something she said was absolutely perfect to work into this blog post. Basically she said that the concept of saving money is simple, however it is not quick or easy, it takes time, discipline and drive. The reward is not instant here, it is not instant gratification like say buying a latte. So for someone who has a habit of buying their coffee's out daily, and feeling good once they have purchased and taken the first sips of that delicious hot beverage, this is instant gratification. Bad habits offer a quicker reward, because it is typically something easier to access. I know you know exactly what I mean, you've probably experienced it in one scenario or another in your life.

I wasn't telling my friend not to buy a coffee or even a burger ever again, I just said it has to be in moderation and viewed as a treat or a reward for not buying a coffee or burger all 7 days of the week but rather just 1 or 2. 

I broke it down like this, 5 days a week of purchased coffee/burger  x $5 on average = $25/ week x 52 weeks = $1300.... the amount spent is more than $5 a day but I put in a nice simple number for an easier example. Imagine what that extra $1300 can do each year, added with other savings... It will get you to your downpayment.

So here it is, steps for saving your downpayment: 

1) Open a separate bank account, I usually suggest a TFSA (tax-free savings account) or savings account within your own account to make transfers easier. 

2) Make a weekly budget, decide what amount you need for your expenses/necessities, like gas, insurance, groceries, etc. 

3) Take a certain percentage of your paycheque each week or bi-weekly, I usually suggest at least 25%-50% if it is doable for you, and pop it into that separate account. 

4) Don't touch, don't even look at it, pretend it doesn't exist. Trust me, if you think you don't have the money, you won't spend it. If the account is harder to pull money out of, like say it has a 2 day hold period, you're less likely to pull that money out for frivolous things or impulse buys. 

Yup, that's it, that's all. 

When you make a mountain out of a mole hill, it is intimidating and scary and you most likely will give up right then and there. It is terrifying thinking "Oh my goodness, how am I supposed to save 5% of $300,000? this is an impossible feat!" Yeah it is, if you try to do this overnight, which I am not suggesting. 

It starts with a goal (buying home with downpayment amount $) , carried out with a plan (how much to put aside daily, weekly, bi-weekly), and then an action (actually putting $ aside/save!).