A new study released by the Pew Research Center reveals that more Americans are renting now than in any other time period in recent history. Over the past 10 years there’s been a five percent increase in renters across all demographics—including different racial and socio-economic groups.
There are plenty of reasons. Home ownership is pricey. Folks are saddled with student loans and consumer debt, limiting their ability to save. And let’s not forget that Blacks, and other minority groups already, significantly lag whites in financial stability, so they are less likely to receive large cash gifts from their parents and grandparents for down payments.
While it’s easy to push thoughts to owning a home on the back burner, the time will likely come when you want to stop paying your landlord and start investing in property. Unfortunately, you can’t start saving in the moment and make the move in a few weeks. You’ll have to wait months, likely years, after your epiphany to stack the amount of cash needed to put 10-20 percent down for a house. Also, don’t believe the fantasy that your salary will magically quadruple by the time you hit your mid-thirties. Studies reveal that the average annual increase is 2.9 percent (if you get one) and most folks only get about at a 9 percent jump when they receive promotions. So unless you’re a doctor, a high level business executive or in a field that’s guaranteed to put you on the top five percent income earner track, you’ll be lucky if your salary doubles by retirement. With those realities, how will you get your spot? The answer is simple: increase your hustle, and your savings. Here are some tips for the latter.
Save those tax refunds
If you’ve decided to maximize your deductions and get a hefty return at the top of the year, resist the urge to “ball out” when you get the check. Put at least a third away for your “house fund” and utilize an account you won’t touch. Make saving easy by placing the money in the bank account without a debit card that you’ll roll over each year…after increasing the balance.
Invest in your retirement
Some retirement funds allow you to withdraw money for a down payment on your home. If you are currently investing in one of these accounts, increase your monthly deductions by 2.5 percent for three months and see if you can live with the budget change. If so, push it up again by an additional 2.5 percent. Keep repeating until you hit the ceiling in deductions or you realize it’s the max you can save. Then dial your deduction back by 2.5 percent and coast.
Ask your parents
Few people have your back more than good parents. Let your mom and dad (or stepparents and the aunties and uncles that are really in your corner) that you’re working on saving for a house and you want to start a fund. Invite them to share any tips they have…and give donations to help kick things off the next time they’re in a gifting mood. Remind them that any support is appreciated. Show your gratitude with thank you cards and periodic updates on how you’re progressing with your goal.
Skip one vacation each year
Yes, travel is important but so is having a little financial stability. If you’re going wheels up on the tarmac three or four times annually—think meetups with the crew and baecations—pass on one and use the excuse that you’re saving for your crib.
Ask for cash gifts
Whether it’s your birthday or the holidays, there are times when your loved ones are still likely to give you a present, even if it’s small. Let folks know that you’re doing some longterm saving for a home and that you’d love a donation to the fund in lieu of well, anything else. Sign up for sites like Tendr that allow folks to give cash remotely, eliminating the potential awkwardness of giving and receiving cash.