Saving for a house is a difficult proposition. Sure, it’s the (apparent) American dream to own property and, arguably, have it become the biggest investment of your life, but it’s not easy to do, that’s for sure. With the amount of student debt young people have right now, along with a propensity for spending money rather than putting it away in a savings account, saving for a house isn’t always in the forefront of millennials’ minds.
In fact, in 2017, Australian real estate tycoon Tim Gurner managed to single-handedly solve why millennials are having such a hard time buying house — they spend too much on brunch. Headline-worthy? Definitely. True? Not necessarily. Cutting back on small monthly expenses and indulgences isn’t going to make-or-break an upcoming house purchase for most people, but adopting better spending habits overall will.
Since we’re not convinced that the old school dream of purchasing real estate is dead, here are some ways to save for a house within the next decade — while treating yourself to avocado toast. Yes, it takes that much planning, guys.
Saving For A House Requires A Designated Amount
Ten-to-20 percent are the magic numbers — in other words, they’re generally the percentage of what you’ll need for a deposit on a house. For a $350,000 property, you’re looking at between $35,000 to $70,000. Then there is also the percentage of your income that you should aim to save each month. This might be difficult or easy depending on your current spending habits, but it doesn’t have to be about depriving yourself. Look at your expenditures and track transactions, and see where you can start to make adjustments — can you get a cheaper gym membership? Do you even use your gym membership? Can you cut down to one to-go coffee a day and make the other at the office? Are you splurging on rent? Living with your parents for a few additional years after college can help you save a significant chunk of change. This may not be your first option, but it is effective.
Automate Your Savings
Set up this 10-to-20 percent to be automatically withdrawn each time you get your paycheck. This will ensure that you don’t forget to put it into savings, and you also won’t be tempted to dip into it that month. What’s left behind can be used for spending, guilt-free. Your 20s are the perfect age to focus on saving. Since you most likely don’t have kids, you don’t have as many responsibilities. You’re also still building your career and working your way up towards the C-Suite! Take advantage of this freedom to ensure that you have healthy financial resources for the upcoming decades. Even if it means telling friends no at times, you will be better off in the long-run.
To accelerate the savings process, consider investing some of your hard-earned funds — putting your money into a stock index ETF will diversify your holdings to help mitigate the risk of investing in just one company. Put about a quarter of your savings budget into stocks, and don’t be discouraged when the stock market dips. Keep calm through the ups and downs, especially since you don’t need the money immediately. Your 20s is a great time to take greater risks with your money and even hire a robo advisor to help! You’ve got several years before you’re planning to withdraw the contributions and their earnings. This means you have more time to accumulate extra wealth.
Scoop Up A Second Job
With apps like TaskRabbit and UberEats, picking up a second income stream is easier than ever. Not into delivering food? Freelancing and tutoring in your given specialty can help you earn some additional money on the side that can go a long way towards relieving debt, fattening up your savings account or even just allowing you to get a second latte with that avocado toast after a long week.
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