Learn how to save for a home
By Michael Demner
Buying a home is the biggest investment most people will make in their lifetime. So it's important to create a budget, stick to your strategy and have a lot of patience. Here are a few tips to help you get started:
Make a budget
This is crucial in order to see where your money is going and how much you can realistically put towards savings. Include all of your income and expenses, both fixed and variable. Once you have your budget set up, make sure to stick to it as closely as possible.
Save early and often
The sooner you start saving for a home, the better off you will be. It may seem like a slow process at first, but if you start early and make regular contributions, the amount will begin to grow quickly over time.
When it comes time to saving for your new home, there are a few options available to you:
- open a high-interest savings account specifically for this purpose,
- invest in a short-term Guaranteed Investment Contract (GIC) or mutual fund, or
- contribute to your RRSP.
Take advantage of government help
Don't forget about government programs that can help with the down payment on your new home, such as the Home Buyers' Plan (HBP). With the HBP, first-time home buyers can withdraw up to $25,000 from their Registered Retirement Savings Plans (RRSPs) tax-free to put towards their down payment. If you're not a first-time buyer but still need help with the down payment, there's the Home Buyers' Plan (HBP) plus program that allows repeat buyers to withdraw up to $35,000 from their RRSPs tax-free - although they must repay this amount within 15 years.
Automate your savings
If you open a savings account, set up automatic transfers from your checking account into that account so that you are automatically saving each month. This will help you reach your goal quicker and makes it easier to stay on track.
Reduce your current expenditures
One of the best ways to save money is to simply spend less than you earn. Try to avoid unnecessary purchases and impulse buys. If you can live on less than what you bring in each month, you will be able to save more towards your goal.
Invest in yourself
Another great way to save money is to invest in yourself by taking steps to improve your financial situation. This could include things like paying off debt, building up your credit score, or taking courses on investing or personal finance. By taking these steps, you will be better prepared financially when it comes time to purchase a home.
With these tips in mind, saving for a home can be an achievable goal for anyone. Just remember to stay disciplined with your spending, automate your savings contributions, and invest in yourself along the way!
Finally, check out our investment returns calculator to see how your savings could grow using different investment vehicles!