How money management and time management intersect when you want to buy a house

I’m currently renting. But I’ve known that I’ve wanted to own real estate for quite a while. I just never had the money to responsibly purchase properties. Since I began taking money management seriously and becoming debt free, the goal of owning real estate became more realistic.

I knew I was going to need a down payment for a house. And saving for a down payment is a lot easier when you don’t have any debt. 

Even though my debt is gone, I’m still diligent about saving money and continue to live below my means with a (healthy) frugal mindset in order to save as much as I can for a down payment. Spending money feels good, yeah. But so does watching the money in your accounts increase over time.

Below I’ll show you how I’m currently managing my money with a down payment in mind.

I still save for retirement/my future

Before I started saving for my down payment, I made sure I had a few important accounts set up.

Emergency fund

This account was the first to be funded. I think an emergency fund is an important step to take before saving for a down payment or investing. I have an emergency fund that covers at least 6 months (or more) of my living expenses. The money is an account that I have immediate access to incase of an emergency.

I don’t continuously add money to the emergency fund. However, I add money to these following accounts every two weeks.

Retirement

I recommend getting a retirement account started before you start saving for a down payment on a house. I also recommend that you continuously add to these accounts. The main reason is because you should take advantage of compound interest. The sooner you start investing, the more money you’re going to make over time.

401(k)
My employer offers a 401(k) and a Roth 401(k) option for retirement investing. Both options offer a match. As soon as I could sign up for a plan, I did. I opted for the 401(k) and invested up to the match maximum so I could earn the free money.

Roth IRA
While opening a Roth IRA account wasn’t my next step after opening a 401(k) (I opened a Betterment account before the Roth IRA), it should have been. Anyway, I now have a Roth IRA in addition to my 401(k) that is regularly funded.

Cryptocurrency

Crypto is risky and I understand that. However, It was important to me to invest in this space based on personal beliefs and the potential I believe crypto and blockchain technology hold. Yes, I only invest money I can afford to lose here.

Money that goes towards a down payment

Currently, the majority of my income is going towards a down payment. After I complete my biweekly budget and set money aside to cover my bills and spending money, I put the rest of the money into Betterment. This account is where I’m stashing the money for the down payment. 

Betterment is a robo-advisor/money management application that essentially invests your money for you. When you sign up for an account, you answer some basic questions related to the goals you have regarding your money such as: what the money is for, the amount of risk you’d like to take, how much money you’d like to have by a certain date, etc. It then takes this information and suggests an investment strategy that it feels is best for you based on your answers to those questions.

I chose to use Betterment for saving for the down payment because I knew that reaching this goal amount was going to take quite some time. So I figured I’d use time to my advantage and invest this money in hopes that I’d see a profit. Thankfully, this account has been doing well with a return rate of about 10%.

Considering the risk of investing my down payment money

I still have some saving to do before I reach an amount that I feel would be appropriate for a down payment. So for the time being, I’m going to leave that money in Betterment. When I get closer to my goal, I’ll withdrawal that money and put it into a savings account and keep adding money there while it’s protected from market fluctuation. 

The reason I plan on doing this is because if the market were to take a hit while I was close to my goal amount for the down payment, who knows how long it would take to recover from that hit. I would hate to see my money disappear just before reaching my goal. So instead, I’ll put the money somewhere safe.

As for now, I’m willing to take on the risk of the potential hit because even without that hit, it’ll take time to reach my goal. In exchange for taking the risk, I’m hoping that the market performs well during this time and I’ll continue to earn money on my investments. 

Staying motivated

Saving for a down payment can be disheartening and frustrating. But if owning property is something that is valuable to you, it’s important to stay focused. 

Try celebrating small wins such as certain dollar amounts saved, gamify your saving, watch YouTube videos or read blogs from users who are also saving their money to find inspiration, chat with friends who have already purchased property or who are in the same boat as you — whatever you gotta do.

I’ve learned that good money management is mostly mental. It’s just counting on yourself to take care of yourself. So go on and take care of yourself.