How to Save Money for a house while renting- 10 tips
Tip #1: Manage your Money With Intention
Establishing a detailed budget that tracks your income and expenses is one of the best ways to be intentional and have clear goals. This will help you identify areas where you can cut back on unnecessary spending and allocate enough money toward your savings goal. Track your expenses diligently to stay on top of your financial situation and help you save while you rent.
Once you know where your money is going, it’s time to see where you can cut back. Set a specific savings goal, and establish how much money you want to save to buy your future home. I also recommend you shift your money to a high-yield checking/savings account like Social Finance. Email me for a referral link and they’ll deposit free $$ into your account!
When you have all of your accounts created and a target savings amount, set up an automatic transfer from your checking account to your savings account dedicated to your home-buying goal.
Tip #2: Reduce Rent Expenses
Your current rent payment is probably your highest monthly obligation. It may be wise to ask yourself if you really need a two-bedroom apartment right now.
You could consider downsizing to a smaller apartment or moving to a more affordable rental location.
Research different neighborhoods and explore options for shared housing. Or even better, are your parents or a family member willing to take you in for a time while you save for a house? It may be worth it!
Lowering or eliminating your rent can significantly increase your savings capacity each month. If moving isn’t an option, consider renting a spare room, or better yet consider asking your landlord if there is anything you can do to help them in exchange for a rent discount or waiver.
This is a great way to save money for your first home while you rent and create relationships that will help you in the long run. You may be surprised at how easy it can be to get a break in the rent if you’re a good tenant and you’re willing to make your landlord’s job easier.
I know a young couple who managed new showings and move-out inspections in a small apartment complex in exchange for free rent. And another who lived in a small apartment inside a mortuary. He picked up and drove dead bodies as needed. He still says it was the best side hustle ever. A little inconvenient at times, but he lived rent-free for two years. Imagine being able to save your entire rent payment for a new home!
Tip #3. Minimize utility Costs
This is an easy way to save money, especially if you make it a habit over time. Take steps to conserve energy and reduce utility bills. Turn off lights when not in use, unplug electronics, and adjust the thermostat to save on heating and cooling expenses.
An extra layer of clothing in the winter and a fan in the summer can help you save a lot on your energy bill and keep some extra money in your pocket. Consider installing energy-saving bulbs and insulating your windows to further reduce costs. Have you ever wondered why some people put tin foil on their windows in the summer? Tin foil absorbs heat and keeps the interior cooler!
Tip #4. Cut Back on Eating Out
This one is tough. I admit it! But, dining out can put a significant drain on your finances. It can burn through your extra cash like wildfire. It’s a good idea to plan and prepare meals at home more often to save money. Try batch cooking over the weekend. Meal prepping makes things easier and more convenient. Packing lunches for work can also lead to substantial savings over time. Try this for a week and I promise you that you will not only have some extra cash you can save, you will feel healthier and so accomplished! Your down payment fund will grow and the good habits you’re making will be great for your health in the long run.
Tip #5. Reduce Entertainment Expenses
I know. I know. This one hurts, too! I’m not saying you can’t have fun anymore. But, look for low-cost or free alternatives for entertainment. Instead of going to expensive restaurants and concerts, explore local parks, museums, and community events. Host meal-prepping date nights! (a two-fer!) or plan game nights with friends. Explore nature, exercise outdoors, or volunteer at the animal shelter.
Take advantage of free trials and online streaming resources and create a phone reminder to cancel before the free trial expires. The key to saving in this area is to explore your local community and tap into the numerous free resources and activities available. With a bit of creativity and a willingness to try new things, you can enjoy meaningful entertainment without breaking the bank.
Tip #6. Limit Subscriptions and Memberships
Review your subscriptions and memberships to identify those you can live without. Did you sign up for My Fitness Pal in January and forgot about it? Or maybe you’re paying for a gym membership that you’re not using (I’ve been guilty of this one!). Be sure to cancel any unused or rarely used app subscriptions, memberships, and streaming services you rarely use. This is something I recommend you do first thing at the start of every year, whether or not you’re saving to buy a home. Be selective about the ones that truly add value to your life. Canceling subscriptions can add a bunch of cash to your pocket and reduce monthly expenses.
Tip #7. Lower Transportation Costs
Evaluate your transportation expenses. If possible, use public transportation or carpool to save on fuel costs. Consider downsizing to a more fuel-efficient vehicle if your current one is costly to maintain. Explore biking or walking as alternative modes of transportation for shorter distances. Plan your trips efficiently so that you can run errands on your way to and from work and reduce extra trips.
Tip #8. Shop Smarter
Be a savvy shopper and look for discounts, sales, and coupons when making purchases. You can save a lot of money that way! Compare prices before buying, and consider buying generic brands instead of name brands. Avoid impulse buying and practice mindful spending habits. Don’t go to the grocery store if you’re starving. You will spend more. Consider online grocery shopping and stick to what you need for your meals that week (back to #4 again).
Tip #9. Negotiate Rent
This one goes hand-in-hand with #2 and it’s best done when it’s time to renew your lease. Consider negotiating your rent with your landlord especially if you think you’re rent is too high for the area. Research rental prices in your city to support your negotiation efforts. A slight reduction in monthly rent can lead to significant savings over time. Let your landlord know you’re on a tight budget and saving for a house. Your landlord was a first-time home buyer once and may be inclined to help you get there.
Tip #10. Find Additional Sources of Income
Explore opportunities to increase your income outside of your regular job. To succeed in saving for a house while you rent, consider taking on a side gig, freelancing, or monetizing a hobby. Direct any extra income solely towards your house savings. Ask your landlord if you can sublease an extra bedroom in your apartment. Here are a few side hustle ideas I shared on Instagram a while back.
ready to get serious about saving for your first home?
I hope you found these tips valuable! Remember that by being diligent with your savings plan, you can make significant progress towards your goal of purchasing a home while renting. Don’t forget, consistency and discipline can help you increase your monthly income and achieve your target amount.
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Until next time, happy saving, happy renting, and here’s to the exciting road ahead—toward owning your very own home!