Times are tough. It can be hard enough to make ends meet, not to mention save for a house. Especially now that home prices are rebounding in many markets, it may feel like the dream of homeownership is out of reach.
But before you write off the cozy cottage with the white picket fence forever, ask yourself a few questions about your lifestyle and spending habits. There might be more room than you realize for you to cut back.
The key question in analyzing whether you’re saving as much as you could be is “want or need?” Many of the things we buy are things we want—things that make our lives more comfortable, convenient, or fun—not things we fundamentally need.
Take, for example, buying a new—or at least new-to-you—car. Do you take out a loan to finance the latest model? Or even buy a slightly older model that is still a pretty comfy and stylish ride? If so, you are not cutting back enough to get ahead. If you’re in saving mode—which pretty much all of us are until we retire—then buying a used car that fits your needs at a price you can pay cash for is the best decision.
Or what about your coffee habits? Do you make yours at home or buy it every morning at the coffee shop? If you buy it, are you spending upwards of $3 a day on foamy caffeinated confections? Many of us are, and spending that kind of money on a daily basis is another way not to get ahead.
If we were to pare down our lifestyles to a point where most of our spending was on things we legitimately needed instead of wanted, we’d all be saving a lot more. Even the grocery bill can usually get a nip and tuck here and there, whether that means buying in bulk at Costco, reducing the meat and increasing the beans, or drinking more water instead of juice or beer.
The savings add up fast. Soon enough, especially if you invest your savings wisely, your dream of homeownership might not seem so impossible after all.
How have you changed your lifestyle to allow for more savings?