Some people find investing in a house a better option than renting. In terms of ease of travel, many are entertaining the idea of having a car. In both instances, purchasing the big-ticket item often entails a down payment.
However, settling the down payment can be a struggle especially for those who are earning just enough to cover their day-to-day expenses. This brings up the question: how will the down payment be sourced out?
This post will discuss several ways on how to save for a down payment, so you can finally purchase that house or car you’ve always wanted.
Smart Ways to Save for a Down Payment
1. Find expenses to cut off
When saving for something big, your budget might need some adjusting. Review your current expenses and find areas where you can reduce your spending. This could mean cutting back on takeout, skipping a vacation, or canceling unnecessary subscriptions.
For instance, if you’re big on espresso and you’re fond of ordering a cup daily, you can save money if you buy only on Sundays instead. Or, if you initially planned to travel overseas, you’ll be able to reduce your expenses by taking a domestic trip as an alternative. The goal is to reduce your spending, so you can have more funds for your down payment.
2. Sell or pawn items you don’t use
Chances are, there are items in your house you no longer use. Why not turn them into cash by pawning or selling them? You may have gadgets, furniture, or clothes you don’t need anymore but are still in good condition. Vend them so you can earn extra money while decluttering your place.
There are various online marketplaces where you can sell used items. Shopee, Carousell, and Facebook Marketplace are a few of the most widely used shopping platforms. Meanwhile, some pawn shops, such as PawnHero and N-Cash, offer online transactions. So, if you have things you don’t use anymore, consider exchanging them for cash.
3. Get a side hustle
If you have a standard eight-to-five job, you can maximize your earnings by taking on a side project at night or on weekends. Evaluate your skills and try picking up some freelance work based on your expertise. Contracting out your skills – say, as a photographer, writer, programmer, or artist – can put extra money in your pocket.
Alternatively, you can expand your search to include jobs outside your current industry. This will diversify your work experience and can help keep you from burning out. By exploring other fields, you can develop new skills you can add to your resume.
4. Pay off high-interest debts
Debts with high-interest rates can slow down the saving process. Therefore, settling them should be part of your goal. One way of paying down a balance faster is to make a smaller payment every two weeks.
Let’s say your monthly amortization is P5,000. If you pay P3,500 every two weeks, you’re putting in an extra P2,000 each month in two smaller chunks. As long as you continue paying a little more than the minimum amount, you’re ahead of the game. This can also help reduce the total interest you pay on your debt, enabling you to save more money.
But before starting your biweekly payments, remember to consult your lender first. Different creditors have varying policies, and you should make sure your new payment structure will produce the results you want to achieve.
5. Put your money in a savings plan
One advantage of putting your money in a savings plan is that it earns interest while being secured by the Philippine Deposit Insurance Corporation. This means your money is protected by insurance coverage.
It’s also easy to open an account, and you can readily transfer money to it from your existing bank accounts. BPI AIA’s savings plan is a combination of savings and life insurance that offers lifetime coverage. This is ideal for long-term saving goals that may include securing a down payment for a house or car. Also, under this plan, you can start investing for as low as P1,800 per month in an easy payment arrangement.
6. Look for cheaper ways to do things
Are you a bookworm? Do you buy a lot of new paperbacks? Try the library. They have a zillion books you can borrow for free. Or do you eat out a lot? Try looking for cheaper places that you still like.
This is how smart people save money. They make it a habit to find cheaper ways to do things without diminishing the fun. If you can adopt this mindset, you will secure more funds.
Remember that the key to saving money is to resist the temptation of spending it mindlessly and to start considering cheaper alternatives. With this in mind, it will be easier for you to reach your savings goals.
Saving for Down Payment Doesn’t Have to Be Difficult
There are ways you can save money for a down payment. While it sounds challenging, having the proper mindset can help you reach your saving goals in no time. Keep in mind that with determination and discipline, owning your dream house or car is possible.
BPI AIA offers flexible life insurance plans to meet your needs while working on your savings. Schedule a virtual appointment with one of our Bancassurance Sales Executives today to learn more about our insurance packages.