How To Start Saving For A House In Your 20s

Buying your first house is both the most exciting and most terrifying thing you could possibly do. I know, I did it in 2015 when I was 28.

Setup a separate bank account to save for the down payment

Now that you’re ready to start saving for a future house, the first thing you’ll want to do is start setting money aside on a monthly basis, into a separate savings account.

Trust me, saving money in your current personal account will create a mess and you run the risk of not being disciplined over time.

Here’s what I did.

  1. I have a local bank where my monthly income goes, this is where my “day-to-day” money stays.
  2. I then searched online for a bank that might give the best interest rate for my money. Most likely your local bank won’t do that, go ahead and check. My local bank was giving a measly 0.40% interest per year.
  3. The bank I chose was Capital One 360, where you can get 1.50% interest on the money you save. Do your own research, you might find another reputable bank that’s giving more (sometimes I see banks or credit unions with 2-3% interest rates). Also, check out my top 5 places to open a savings accounts post.
  4. Go ahead and open your account at the bank of your choosing.
  5. Once set up, you can usually rename the account to your choosing. If you can, have fun with it and include something like “Future Home Fund” and add the deadline date right in the name if you’d like.
  6. Now, on a monthly basis, you should deposit ideally between 5% to 10% of your monthly income towards your future home. If you can do more some months, awesome. The goal is to do at least 5% a month, EVERY month.
  7. Rinse and repeat, and watch the fund money keep rising over the months.

Put money into your savings account every month

A young married couple is laying on the floor and putting money into a piggy bank. They're saving money towards a future house together.

Ideally you can aim to save 10% of your monthly income towards your down payment.

If you can’t do that every month, move down to 5%, but always try to systematically put money into your designated savings account every month.

Seeing that number going up will do wonders to your “delayed gratification” muscles.

What to do now

We talked about an action plan of creating a separate bank account (and how I did mine) and allocating at least 5% (ideally 10%) of your monthly income towards your future home.

Don’t overthink it, just do it for a few months, and you’ll see that down payment money growing higher and higher.

As a bonus, head over to Zillow (or whatever home finding site you like), and start looking at houses you might want to buy in a few years.

Note the cost of the house, and then the down payment number. Then look over at the mortgage, taxes, estimated HOA, and other details.

Get used to seeing those numbers, do this practice often. When I did it, over time those numbers stopped looking scary to me, they seemed more doable over time.

Your mind will see that you want this house at this cost, and will help you get comfortable and make moves to get to your goal.

Good luck!

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