How to save for a house while renting

If you’re renting but want to someday buy a home, you know that saving up a down payment is an important first step. Unfortunately, everyday life and its many expenses can make it hard to know how to save for a house — especially when you’re paying rent every month. The trick is to balance paying rent and saving money at the same time.

Approximately 36 percent of U.S. households lived in rentals in 2015, according to The State of the Nation’s Housing 2016, a report by Harvard University’s Joint Center for Housing Studies. The same report showed that 21.3 million renters spent more than 30 percent of their income on housing in 2014.

Here are 20 ways to save for a house:

1. Use a budget app

These days, there are plenty of free or low-cost budgeting apps that can help you toward your goal of buying a home. Take advantage of them, said Than Merrill, real estate expert, CEO and founder of FortuneBuilders.

“There are a number of apps — like Dollarbird, Fudget and LearnVest — that crawl through your banking accounts to track your spending for you,” Merrill said. “Once you know where you are spending, set a maximum budget for each category.” Then, stick to it. And don’t forget to budget in your newest goal: buying a house.

2. Find a gym-free workout

The average cost of a gym membership is $58 a month, according to Statistic Brain, which provides market statistics and research. The group also found that 67 percent of gym membership holders never use them. That’s a lot of money down the drain — money that could go toward a down payment.

Better to save money and get some fresh air, Merrill said. “Go for a run, take your yoga mat to the park, or attempt a hike at a local trail. If you’d rather not work out outside, there are plenty of online videos you can stream that will allow you to work out in the comfort of your own home. Get all the benefits and none of the cost.” Plenty of fitness apps are available, too — and many of them cost nothing to use.

3. Go online

No matter what your skill, there’s probably someone willing to pay you for it, and the internet offers an easy way to cash in, Merrill said. “Sites like Fiverr allow users to advertise their talents and abilities, no matter how mundane or tedious they might seem, in an attempt to sell that service,” he said. Find a way to make some extra cash to save so you can buy a house.

4. Use autopay

Late fees are not only aggravating, they are down-payment budget-busters. They’re also easily avoidable, Merrill said. “Most credit card and (utility) companies allow users to set up automatic payments,” he said. “That way, you will never miss a due date and incur those nasty late fees.” Merrill added that having a budget in writing really helps you to stick to this and have enough money in the bank every month for the auto withdrawal.

5. Bill yourself

Treat your down payment goal as importantly as you treat other bills, like rent, utilities or life insurance. In other words, create a bill for yourself and pay yourself every month, on time, suggested Kevin Gallegos, a vice president with Freedom Financial Network, which helps people meet financial goals.

“Take advantage of automatic deduction plans you set up,” Gallegos said. “Some financial institutions let you arrange automatic withdrawal from your checking account to a savings account.” If your bank does not provide this service, there are apps, such as Digit, that do this for you.

6. Be flexible

If having a budget is key to saving for a house, so is being flexible, Merrill said. And no, the two are not mutually exclusive. “Of course, it is absolutely necessary to set goals and objectives. However, if you end up going over your budget one day, you should not feel the need to throw in the towel.”

In fact, Merrill has found that if you’re new to saving, you’re bound to have some setbacks at first. “The important thing is to not let those setbacks drive you back to your old over-spending habits,” he said.

7. Make accessing your savings inconvenient

Chances are you’re human. And when you see a pair of jeans or new surfboard you really want, you’ll rationalize digging into savings for it. One way to make it harder is to actually make it harder, Gallegos said. Put the savings in an account that doesn’t have an ATM card linked to it. Use an investment vehicle or bank that you must physically visit to make withdrawals. This kind of arrangement is a little more inconvenient, but if it helps you save for a house, it might be worth the trouble.

8. Stay healthy

Another good, but less obvious, answer for how to save money for a house while renting is to stay in good shape. Doctor visits, medications, emergency medical procedures: These are not cheap, even with insurance, so Merrill said one of the best pieces of advice he gives potential homebuyers is to stay healthy.

“Get those few extra hours of sleep, take your vitamins, wash your hands — whatever you have to do to keep yourself healthy,” Merrill said. “Taking care of yourself is key to keeping your pockets full.” Besides, when you finally do move into your dream house, you’ll need the stamina to tackle all those home-improvement projects.

9. Pay down credit card debt

The average credit card annual percentage rate clocking in near 13 percent, according to data from the Federal Reserve Bank of St. Louis. At this high rate, holding credit card debt while you’re trying to save to buy a house is sort of like filling a bucket with holes in it.

So, said Gallegos, make paying off your credit cards part of your savings plan. “Incorporate paying off credit card debt into the budget as a required, ‘must-buy’ item,” he suggested.

10. Be Energy efficient

Energy costs money — sometimes a lot of money. For instance, the average amount spent on utilities in 2015 by consumers was $3,885, according to the Bureau of Labor Statistics. That’s a lot of money that could go toward a down payment.

“There are a number of ways to save money by cutting your energy usage,” Merrill said. “Take a shorter shower, opt for energy-efficient appliances, and keep the lights off in rooms you’re not in. Turn off the water in between scrubbing dishes and stock up on blankets during the winter so you don’t have to turn on the heater. If you can’t live without the AC in the summertime, you can still cut back on costs by setting your thermostat between 74 and 78 degrees and by keeping your air filter clean.” And, that’s just a start; get creative and see what else you can do to cut back on your energy use.

11. Shop generic

Yes, Coke has very cool commercials and iconic can art, whereas generic colas have no celebrity spokesperson and seem to fade to the back of the shelf like a shy girl at the dance. But that wallflower could save you a lot of cash, Merrill said.

“Name brands might only be $0.25 more expensive, but after a month of grocery shopping, buying all name brands can add upwards of $100 to your food budget,” he said. Merrill suggested putting that money into your down payment savings account. “You will be shocked how much you save after just six months,” Merrill said. “And the fact of the matter is, you probably won’t even notice a quality difference in those generic brands.”

12. Carpool, bike or take the bus

Commuting to work can eat a lot of fuel — and down-payment money. In fact, transportation costs are the second largest expense for consumers after housing, coming in at $9,503 in 2015, according to the Bureau of Labor Statistics. Instead of seeing that as a roadblock to buying a house, see it as an opportunity to cut and save for a house by carpooling, taking the bus or riding a bike to work, if possible.

13. Maintain appliances, cars and equipment

When cars or dishwashers or lawnmowers break down, it’s usually a surprise and usually expensive. That’s why Merrill suggested that keeping up on maintenance is one step toward saving for a down payment on a house. Maintaining is almost always less expensive than replacing or fixing, he said.

14. Redeem credit card rewards for cash

Sure, a quick weekend trip to San Francisco courtesy of some free air miles could be fun. But if you have the option to cash out reward points and stick them in your down payment fund, do it, advised Gallegos.

A second-best option is to cash them in for gift cards to offset your spending. “Some credit cards even double the value of your rewards at specific retailers,” Gallegos said. Using cash rewards from your credit cards can be a good solution for how to save for a house deposit while renting.

15. Cut the cable cord

With the mean cable bill coming in at about $103 as of September 2016 — according to Leichtman Research Group, which specializes in analysis of the media and entertainment industries — cutting the cord could be one of the healthiest things you do for your down-payment savings. And don’t fret; there are plenty of alternatives to cable to get your TV fix. Options include everything from Netflix and Amazon Prime to digital antennas and Sling TV.

16. Withhold less

Are you getting a huge tax refund every year? That might mean that you are letting the IRS hold onto your money every paycheck — interest-free. So, you might want to have less of your paycheck withheld every month and put that money toward your down payment fund. For instance, a $2,400 refund translates to $200 a month toward your down payment.

Related: How to Fill Out a W-4

17. Develop a green thumb

Gardening might not be your passion, but when you’re trying to stay on a strict budget, developing a green thumb can be very beneficial, Merrill said. “Start growing your own fruits, vegetables and herbs, and you will be surprised how much you’ll save on your next visit to the grocery store,” he said. As an added benefit, you might even eat healthier — it’s a homegrown win-win.

18. Start clipping coupons

You don’t have to go so far as to turn into a star on “Extreme Couponing,” but taking advantage of coupons and coupon codes can really save you money. And these days, sites like Coupon Sherpa, Coupons.com, DealNews and others make using coupons easier than ever through your computer or smartphone.

19. Save your raise

The average salary increase for 2017 is estimated to be 3 percent, according to the Society for Human Resource Management. If you fall into that category, that could mean a night out and some new duds — or a nice chunk of change toward your down payment. For instance, a 3 percent raise on a $50,000 salary is $1,500. Stick it in the bank.