4 ways to save for a down payment

They say the harder you have to work for something, the more you appreciate it. Well you’re about to find out. You’ve got a goal, and you’re ready to put in some sweat equity—metaphorically or literally, your choice.

Saving up a down payment is a way of earning the things we really want in life, whether that’s a house, car, or something else. The larger your down payment is, the less you’ll spend in the long run. A higher down payment means:

• Less debt to pay interest on
• Lower monthly payment
• Potentially lower interest rate
• No private mortgage insurance payments

So as you decide what target to aim for, keep in mind that the budgeting efforts you put in now will ultimately score you a better deal. Also, it never hurts to go above and beyond the minimum.

Here are a few tried-and-true savings strategies to help you out:

1. Pay it forward

Once you take on a new loan, you’ll have a whole new monthly payment to absorb into your budget. You can adjust your budget for it now and save up the down payment while you do it—double win.

Estimate how much your loan payment will be, and start paying it to your savings account. If you’re saving for a home, figure out how much your mortgage payment will exceed your rent, and pay yourself the difference. You can even set up a monthly automatic transfer so you don’t have to think about it.

2. Sock away windfalls

Whenever a little extra cash comes your way—like a bonus at work, a little birthday money, or a tax refund—what do you normally do with it? Instead, divert your financial windfalls into your savings account.

You might be surprised how quickly they add up. Small sums of money don’t seem like much at the time, so we tend to forget them and underestimate how much we’re spending from day to day, especially when we’re using cash. You can make the choice to stop letting financial windfalls trickle through your fingers and start funneling them toward your long-term goals.

3. Keep the change

My dad has a giant jar he puts all his change into. Every year, he empties it out and uses it to go camping at the coast. I have one too, but it doesn’t fill up nearly as fast since I use my debit card for almost everything.

You probably have a similar story. That’s why OCCU created the Change Jar program, a way to digitally save your spare change. Every time you make a purchase, we’ll round up to the nearest dollar and transfer the extra into your savings account. All you have to do is enroll; the rest happens automatically. And the best part is, your monthly budget won’t even notice the difference.

4. Give yourself some tough love

Think you’ve squeezed every last drop out of your budget? Go over it one more time. There are always more ways to save. Ask your credit card company for a lower rate. Pick a service you’ve had for a while and shop around for a better deal. Write sticky notes, make spreadsheets, download an app—whatever it takes.   

“To create savings you have to be ruthless,” says The Simple Dollar. “Set a time to review your spending and budget, say the first and third Mondays of every month. Go through the numbers with zeal, asking if every nickel and dime was justified.”

The more work you put into saving, the faster it goes. Before you know it, you’ll have your down payment in hand and your goal within grasp.