How to Save for a House: 8 Step Guide to Reach Your Goal Fast!

Last Updated November 17, 2024 by Davina Kelly

You’re ready to buy your dream home and finally have a place to call your own, but your savings account is looking a little sparse. You can learn how to save for a house and make that dream a reality without giving up the things you enjoy. 

Let’s be honest, saving for a house can feel like a huge mountain to climb, especially with today’s high prices. The thought of setting aside tens of thousands of dollars might seem impossible. But trust me – it’s not. It’s all about mindset, discipline and making the right choices. 

In this post, I’m going to break down the exact steps on how to save for a house quickly, based on my personal experience of saving $36,000 in two years.

We’ll go through practical tips on how to cut expenses without sacrificing your lifestyle, make the most of your income, and stay on track toward your financial goals.

Whether you’re just starting or you’ve already got some money tucked away, this guide will break down everything you need to know about how to save for a house. 

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How To Save for a House (In 8 Easy Steps):

Saving for a house downpayment isn’t a walk in the park, but I’m here to show you it’s doable, even on low income. I managed to save $36,000 in two years while still enjoying life including holidays and a few splurges. 

You don’t have to be on an extreme budget or give up all fun to save for a house. You just need the right strategy. 

Here is how I did it and how you can save for a house too.

Step 1: Assess Your Outgoings – Where’s Your Money Going?

First thing’s first – where is your money going? Before you start saving you need to know where your money is going each month. For me, the first step was realising that I was overspending on unnecessary things. 

This included eating out, takeaways, clothes, lunches at work and little purchases here and there. They all seemed small, but they added up to big amounts. 

Take a good look at your bank statements for the past few months and ask yourself where is your money going? Are you spending $100 on takeaways or coffee every month? Is eating at nice restaurants taking up a bigger bite of your budget than you thought? 

If you don’t already have a budget, now’s the time to make one. You can use an app or Spreadsheet to track your spending. This will help you categorise your expenses into essentials (like rent and bills) and non-essentials (like shopping and eating out).

Example of How to Do It:

Let’s say your monthly income after tax is $2,500. After subtracting your fixed expenses like rent, car payment, fuel, phone bill etc, you have $800 left. It’s easy for the $800 to vanish if you don’t have a plan. So, the goal here is to track everything, see where you’re wasting money and make adjustments.

Grab my FREE printable budget and expense tracker below.

Step 2: Identify Where You Can Cut Costs

Now that you’ve seen where your money is going, it’s time to figure out where you can cut back without making your life miserable. Trust me, you don’t need to go into full-on deprivation mode to save money effectively. 

Saving for a house means making sacrifices – there’s no way around it. But it’s more about reducing unnecessary costs.

Look at the areas you are spending the most and identify where you can make changes. Here are some of the ways I cut costs to save more money. 

Shopping: I love shopping as much as the next person, but I knew it was where I was wasting the most money. Instead of cutting it out entirely (because life’s too short for that), I decided to limit it. 

So, instead of buying clothes every weekend, I gave myself a monthly budget for shopping. This way I didn’t feel deprived, but I wasn’t going overboard either. 

Work Lunches: Another area where I was losing money was on lunches at work. Buying a toasted chicken and pesto panini or coffee every day was convenient, but it added up to around $120 a month. By preparing my meals at home and bringing lunch to work, I saved that money without feeling like I was making a huge sacrifice. 

Eating Out: Instead of spending $100 or more on pricey dinners and cocktails every weekend, I’d have a few drinks at home. Buying a $10 bottle of wine from the supermarket and limiting my spending when I was out helped me enjoy my nights out without blowing my budget.

You don’t need to cut socialising entirely – just be more mindful of how much you’re spending when you’re out.

Subscriptions: Do you really need all those streaming services or can you just live with one? Go through all your subscriptions, keep the one you watch the most and cancel the rest. 

Step 3: Make Big Sacrifices When Necessary

As much as I hate to admit it, sometimes bigger sacrifices are necessary to meet your savings goals. For me, this meant giving up my luxury car and trading it in for a more affordable one. It wasn’t easy, but it saved me almost $150 a month in car payments. 

You might not have a luxury car to trade in, but you can still make significant savings by looking at the big expenses in your life. 

Do you really need a new phone, or can you switch to a SIM-only contract? Can you downgrade your gym membership or swap expensive hobbies for more affordable ones? 

The goal isn’t to punish yourself, it’s to prioritise your long-term goals over short-term pleasures. 

Step 4: Set a Realistic Savings Goal

Once you’ve cut back on unnecessary spending, the next step is to set a clear savings goal. Start by estimating how much you’ll need for a down payment. This is typically around 20% of the home’s price. 

Some lenders offer lower down payment options, as low as 3 – 5%, but aiming for 20% can help you avoid additional mortgage insurance costs.

Aside from the down payment, there are other costs to consider. Closing fees can add another 2 – 5% of the home’s price, plus you may need funds for moving expenses, inspections and potential repairs.

Having a complete picture of these expenses will help you save without any surprises. 

Once you know your target, break it down monthly. Let’s say you’re aiming for a $60,000 down payment and you want to buy a home in five years. That’s around $12,000 a year or $1,000 a month you’ll need to save. 

Breaking it down this way makes it feel more manageable. Instead of focusing on the daunting $60,000 figure, you’re just setting aside $1,000 a month. 

If $1,000 sounds overwhelming, don’t panic. You can adjust your timeline or look at ways to increase your income (we’ll cover that soon). The key is consistency – setting a monthly savings target and sticking to it. 

A helpful rule of thumb is to save at least 20% of your income if possible. Personally, I set aside around $1,500 a month after covering my essential expenses. That meant I was still living comfortably but saving aggressively at the same time. 

If that amount feels too high, start with a smaller goal, even $500 a month. Over three years, that’s still $18,000, which is still a significant amount. 

Step 5: Set Up a Dedicated Savings Account

One of the best ways to stay on track is by creating a separate savings account just for your house fund. I suggest using a high-interest savings account so your money earns interest while it sits there. 

If you’re in the UK you can open a Lifetime ISA and benefit from a 25% bonus to your savings each year. 

Keeping your house savings separate from your regular checking account makes it less tempting to dip into it when you’re eyeing that new phone or a spontaneous weekend getaway. 

Pro tip: give the account a motivating name like “Dream Home Fund” or “My Future House” to remind you what you’re working toward every time you see it. 

Automate Your Savings

Wanna know the easiest way to hit your savings target every month? Automate it. Set up automatic transfers so that a portion of your paycheck goes directly into your house savings account.

This removes the temptation to spend the money and makes saving feel effortless. Plus, when you pay yourself first (meaning you save before you spend), you’ll build the habit of living on what’s left over instead of trying to save at the end of the month. 

Step 6: Reward Yourself (In Moderation)

Saving doesn’t mean you have to live like a hermit. Life is meant to be enjoyed and it’s important to reward yourself for your hard work. The key is moderation. 

If you’ve been consistently saving for a few months, don’t feel bad about splurging on a weekend city break or a night out. For me, city breaks were perfect because they were affordable and gave me a chance to recharge without derailing my savings goals. 

A three – or four-day trip cost around $400, which was much more manageable than a $3,000 trip to Mexico.

By treating yourself occasionally, you’ll stay motivated to keep saving, rather than feeling burned out or deprived. 

Step 7: Stay Disciplined and Consistent

The most important part of saving is discipline. You won’t reach your goal if you save $1,500 one month and then blow it all the next. Consistency is key.

For me, it wasn’t always easy. There were months when I wanted to spend more on holidays or shopping, but I reminded myself of my bigger goal: buying a house. Keeping my future in mind helped me stay on track.

One tip is to create a vision board or save pictures of your dream house on your phone. Whenever you feel like giving up or overspending, look at those pictures and remind yourself why you’re saving in the first place. 

Step 8: Don’t Be Swayed by Others

Sometimes, people won’t understand your decision to save and they might even try to convince you to spend more. They might say “You’ve got savings, just use them.” But your savings are for your future, not for frivolous spending.

It’s so important to surround yourself with people who support your goals. If your friends know that you’re saving for something important, they’ll understand if you skip a night out or two.

Don’t feel pressured to explain your financial choices to everyone. 

Step 9: Visualize Your Success

One thing that kept me motivated was visualising what I was working towards. I would scroll through real estate websites and imagine myself living in my dream house. Seeing that goal in front of me, even if it was just on a screen made the process feel more tangible and exciting.

For some people, creating a physical vision board might work better. Others may find that simply keeping pictures on their phone does the trick, Whatever works for you, just keep your goal at the front of your mind and stay motivated. 

How to Save for a House (Bonus Tips)

Sometimes, cutting costs can only get you so far. If you’re looking to fast-track your house savings, you might need to bring in some extra cash. 

Side Hustles and Extra Income Streams

There are plenty of side hustles out there you can try to earn extra cash. Here are some ideas to consider:

Freelancing jobs

Selling on Etsy

Remote side hustles

The beauty of a side hustle is that it can be flexible which allows you to work around your full-time job. Plus, every dollar you earn can go straight into your house savings. 

Ask for a Raise or Promotion

This one might take some courage, but asking for a raise can significantly boost your house savings. If you’ve been doing good work, make your case and negotiate a higher salary. 

The extra income can go towards your savings each month which will cut down the time it takes to reach your goal.  

Sell Items for Extra Cash

Chances are you’ve got some stuff lying around that you don’t need – old clothes, gadgets, furniture, etc. Declutter your home and sell these items online. 

Not only will you clear out your space (which is great when it’s time to move), but you’ll also add a bit more to your savings. 

Related: 11 Top Tips for Selling Clothes on eBay

Use Windfalls to Boost Savings

Got a tax refund? A bonus from work? A birthday gift? Instead of blowing it on something fun, throw that money straight into your house fund. Windfalls like these can give your savings a serious boost, shaving months (or even years) off your timeline. 

Take Advantage of First-Time Homebuyer Programs

If you’re a first-time homebuyer, there are some great programs out there that can make homeownership more accessible. 

Here in the UK, we have the first homes scheme which allows you to buy homes at a discounted price. If you’re in the U.S. there are programs like FHA loans which offer lower down payment requirements making it easier to buy a home sooner. 

It’s worth doing some research to see what you might qualify for, as these programs vary by location and situation. 

Final Thoughts on How To Save for a House

There’s no magic formula for saving quickly – it’s all about discipline, making smart choices and keeping your eye on the prize. I was able to save $36,000 in two years while still enjoying life and if I can do it, so can you. 

Whether you’re aiming to save for a house, a big purchase, or just have more financial security, the same principles apply. Track your spending, cut unnecessary expenses and save consistently. With the right mindset, your financial goals are totally achievable.

I hope you have found this post helpful and now know how to save for a house without feeling deprived. Which step are you on in your saving journey? Let me know in the comments below. 

This post was all about how to save for a house.

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