A home will probably “be the biggest purchase that most of us make,” says Amin Dabit, director of advisor services at financial management company Personal Capital. But though it can feel out of reach, he says, “there are things you can do” to help you become a homeowner.
He and other experts recommend that, if possible, you try to make changes to what are likely your biggest monthly expenses, including housing and transportation costs. These types of changes are likely to help you save the largest amount of money in the shortest amount of time.
1. Rethink how you get around
The average American spends $9,576 per year to own a car. Because owning a vehicle can be such a drain on your finances, finding a new way to get around could be a way to free up a significant amount of money.
This works best if you live in an area with adequate public transportation options or you have access to another means of getting around. Getting rid of your car “may not be the easiest thing to do for someone who’s accustomed to jumping in the car and going,” acknowledges personal finance expert Marsha Barnes, who runs the website The Finance Bar.
But if you can walk, ride a bike, and occasionally use a ride-sharing service, Barnes says, the choice to be car-free can save you a lot of money. And it’s not “something that you have to do forever,” either, she adds. If you love and miss having a car, you can get one after you’ve reached your savings goal.
Entrepreneur Kevin O’Leary has reaped the benefits of going without a car. As the “Shark Tank” investor told CNBC Make It, “I use my phone to call Uber or Lyft and they take me around the city. I save a fortune. I feel good about it. I hate cars.”
2. Move back home
The last thing many independent young adults want to do is move back in with their parents, but if doing so is an option that’s available to you, it’s probably the single biggest way to save a lot of money.
“You’re basically getting rid of all of your household expenses when you move back home,” says Barnes. While you may throw mom and dad some money for rent, you should still come out ahead. A 25-year-old in Pennsylvania told USA Today that she was able to save 75% to 80% of her paycheck by moving back in with her parents, and that helped her save up enough to buy a home.
“You really want to do something that makes a huge impact [financially], and moving back home is a way to do that,” Barnes says.
You really want to do something that makes a huge impact [financially], and moving back home is a way to do that.Marsha BarnesTHE FINANCE BAR
3. Pick up a side hustle
The right side hustle can earn you thousands of dollars a year that you can dedicate to your down payment fund. The average working adult with a side hustle earns $14,705 per year, according to a recent survey. So, if you can find the right gig, it could be a good way to supercharge your savings.
“A great way to increase your savings is to insert yourself into the gig economy,” says Barnes.
But which side hustle could be a good fit for you? That depends on your individual skill set and how much you want to work, and what options you have available to you. Whether there’s a place you can rent out on Airbnb, or even just an iPhone and the ability to snap a photo, there’s probably a way you can make some extra cash.