Y'all. I have been covering relevant money, real estate, and millennial homeownership for over a DECADE at this point (as I sit writing this piece in a cozy coffee shop in March of 2023). Currently, with rising interest rates and pandemic-induced inventory issues, it's BLEAK. But it has always been bleak. Trust me, I've been writing about it for over a decade. You can learn how to save money for a house in 6 months — you just may not want to be a Frugal Franny for that long.
While certain factorsdodepend on individual circ*mstances – the price of housing in your area, and your personal debts, for example, there is a way to save up at least a decent chunk of money for a home in the next six months, it just takes a little creativity. As Zuma from Paw Patrol says, “Let's Dive in!” (Three guesses what phase of life and motherhood I'm in right now.)
Live in the metro Atlanta area and need a real estate agent? I’m now fully licensed and working in real estate as my full-time job. I love to work with both buyers and sellers. Here’s how to connect with me as an agent. Let’s see if it is a fit and work together!
How do I save money for a house in 6 months?
Whether or not you're able to save for a house in six months will be dependent upon a variety of variables: your income, the cost of housing in your area, and your debt load. With these in mind, it is doable to save up a portion of a home downpayment with two primary actions: cutting back on all extraneous expenses and automating the savings into a separate high-yield savings account.
How to Save Money for a House in 6 Months: The Math
For the purposes of this exercise, we’re going to demonstrate how an average person would save in a hypothetical scenario. We are going to assume that this person:
- Makes $50,000 per year, or around $100k per household – the average salary of a 2016 college graduate1)
- Has no large debt or other recurring monthly payments (Largely unrealistic given the state of student loan repayment in this country, but bear with me.)
- Is looking to buy a $398,000 home (The 2022 average home price here in the U.S.)
Utilizing an FHA loan option, a potential home buyer would need to save 3.5% of that $398k price tag, or $13,930.
How to Save Money for a House in 6 Months: The Plan
Though this plan specifically shows you how to start saving big come January, you shouldn’t feel restricted by it. While there is something to be said for starting fresh in the New Year, these savings hacks are flexible enough to carry you through any month and should be customized to your personal goals. (More hacks and ideas to save money, here.)
JANUARY |Automate your savings.
This is a basic first step that can go a long way. At the beginning of the month, sit down and evaluate your budget. Figure out how much you can reasonably save after expenses such as rent, utilities, groceries, and a bit of “fun money” (we all deserve a little something for ourselves once in a while!) If you don’t know where to start, Elizabeth Warren’s50-30-20 method is a great way to start.
The 50-30-20 method is meant to evenly separate out take-home income: 50% to fixed expenses (like rent and bills), 30% to discretionary money (like groceries and fun), and 20% to savings (or debt repayment.)
An individual with a $50,000 annual salary, with no special deductions and the standard tax rate applied, would take home around $2,600.00 per month. Using the 50-30-20 method, this person should set aside 20% of their take-home pay, which would yield $520 each month.
Savings:$3,120 in savings for six months
JANUARY | Cut out unnecessary bills.
You should be doing an “audit” of your monthly expenses every year and the start of a new year is a great time to get this done. Review every expense: every insurance payment, cell phone bill, and automatic subscription, and see where the areas of cost savings are. New services (such as Rocket Money) even do the heavy lifting for you and can reportedly save consumers $250.00 a month.
Savings:$250 per month X 5 remaining months left in the year = $1250
JANUARY | Find unique ways to earn more.
Focus on ways to earn more instead of saving. From Lyft,to Postmates, to Etsy, to online surveys, and selling old items on Ebay, there is no limit to ways you can earn money in your free time.
For extra resources here's how to start a side business and my favorite money-earning apps.
Savings:$500 a month X 5 months left in the year = $2,500
FEBRUARY |Start a savings challenge.
Take saving one step further and institute a six months savings challenge, where $1 goes in a jar on week one, $2 on week 2, etc. You could also try a no-spend challenge for the month of February and see how much you're able to save.
Savings: $689 at the end of month six
MARCH |Skip the lattes.
We dislike the tired old “SKIP THE LATTES AND BUY A HOME” advice everyone gives as much as you do, but for the purposes of saving up enough money in a year to buy a home, cuts will have to be made. I know, we hate cutting back as much as the next person, but honestly, lattes and lunches out are the easiest places to do it.
Savings:$300 for a half of year of making coffee at home, and another $300 for half a year of cutting lunches out for a total of $600 saved.
APRIL | Save your tax refund.
It’s tax season, and the average $50k earner receives a $3,000 tax refund. If you’re lucky enough to get a refund, you should immediately bank this cash in your home down payment fund (no matter how tempting it may be!)
Savings:~$3,000.00
MAY | Set up a “smart” savings plan.
Get a little bit more creative by using an app (such as Qapital) to “save the change” from your bank account. The app will analyze your spending to sneak away pennies or an extra dollar that you won’t miss (believe us, it adds up). And, depending on how many goals and milestones you enable, you could be on your way to saving up to $1,000.
Savings: ~$1,000 in 3 months)
JUNE | Staycation.
American households spend roughly 5% of their income each year on vacations and travel. Skip yours this year (it’s just one year!) and have fun playing tourist in your hometown. Check out your cities local events calendar, or hit up the museum you’ve always wanted to visit (but never had the time). There may be more in your own backyard than you think!
Savings:For someone making around $50k this is a savings of $2,550.
All of these little creative changes and small sacrifices could save a total of $14,709.00 in just a 6 month period.
Though this may not be able to fund an entire downpayment plus inspection fees and closing costs, you’re well on your way to a home of your own.
P.S. Want more savings ideas? Here's a guide for how to save $5,000 in 3 months' time. Or you can utilize my free home-buying checklist.
Pssst. Here's how to work with me as your agent if you're in Atlanta and need help buying and/or selling your home.
