3 mental shifts that can help you save money for a home


A down payment on a home is, for many people, the largest single expense of their lifetime. But with the right mindset, saving enough to reach that goal may not be as difficult.

It can help to reframe how you think about your housing situation. "There's a mental shift from when you're a renter to when you're a homeowner," says Amin Dabit, director of advisor services at financial management company Personal Capital. So, he says, to get there, first you need to "get in the mentality of homeownership."

Here are three ways you can do that:

1. Visualize your goal

An easy initial step you can take is to visualize the home or situation you want. Give this some serious thought, and ask yourself some questions about what you need out of a home and what you can afford.

If it helps, you could create a vision board, or pull together pictures on a site like Pinterest.

Dabit says this exercise will keep you grounded in reality, as long as what you're picturing is a practical goal you can actively work toward achieving. "One of the powerful things [that can] change behavior and mindset is when you visualize what you want," Dabit says. "And with homes, you can do that."

How to make your home-buying dream a reality

2. Reframe your sacrifices

Think of your goal of saving up for a down payment as a sort of quest. Saving up a significant amount of money will likely require you to make financial trade-offs and give up certain other expenditures along the way. You may choose to squeeze into a smaller but less expensive rental for the time being, for example.

Be sure to focus on that end goal you're sacrificing for. In other words, think about what you're getting (closer to buying your dream home) rather than what you're giving up (some square footage in the present).

You may even want to open a separate savings account for your down payment fund, and name that account something like "House Fund." That will give your goal a sort of physical manifestation, says Dabit.

With each change you make, like forgoing a night out or cutting back on your subscriptions, you'll see the payoff as that savings balance slowly rises and gets you closer to your goal.

3. Watch out for lifestyle creep

When you get a raise, bonus, or promotion, you may fall victim to lifestyle creep and start spending more money simply because you have it. That could take the form of treating yourself by going out more frequently, or splurging on a bigger apartment or a new car.

"If you get a raise," Dabit says, tell yourself that "you're going to maintain your lifestyle — and that additional raise, put toward the house fund on a monthly basis."

To achieve that, review your budget framework and prioritize which discretionary purchases are most important to you within the limits you set. It can also help to hang out with like-minded people who are also watching their spending.

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