Saving for a Down Payment


For as long as I can remember, one of the biggest dreams of mine has been buying a house. When I turned 18, I created an account specifically for that purpose. In Finland, you can save money into an ASP account with a higher interest rate for the first two years. Once you have at least 10% of the price of the home saved, your bank will lend you the remaining amount. You get an additional 4% interest for the next 6 years. Sounds great, right? At the age of 18, I started saving €50 a month and have been at it ever since. Even without the additional interest rate, this would be a great way to save for a down payment if you start early enough.

The only downside is that you are only able to buy a house from Finland, which is a pity considering I am on the market for a house in the US. In any case, I think our government-backed loans and the general mindset related to buying a home in Finland is something that people from other countries could learn from.

#1 Start now
I realize not all of us start saving young, and for many people that would simply seem impossible. I get that. What matters is that you start immediately, even if the monthly contribution would be small. Starting early means you do not have to be quite as frugal for as long. A little less stress is worth the hassle of going and opening a savings account for a down payment. + A designated savings account for a home is extremely motivating, as you can easily track your progress. An automated transfer is the best way to save almost unknowingly.

#2 Live below your means
This might seem like an obvious one, but it really makes a difference. Living from paycheck to paycheck will not leave room for saving. For some extra motivation, you could calculate how much money you spend on rent annually. All that is money that could be used for paying your loan. Finns are not nearly as debt-ridden as Americans. Only use a debit card (or use your credit card as a debit card) and do not be swayed into overspending.

#3 Be realistic
Your first home does not have to be perfect. Do not shoot for the moon. After you have managed to save for a down payment, you will need to start paying off the mortgage. This must be considered in your budget, in the size of your loan etc. Banks would be glad to lend you as much as humanly possible, but it does not mean you have to go with it.

#4 Stay motivated
Saving money comes down to being patient. The hardest part is to keep at it and to remember why you started in the first place. For me, it helps to visualize my future home and the amazing feeling that accompanies having secured a corner of the Earth just for myself. I often go to Pinterest for some extra inspiration when times are difficult.

#5 Start a side hustle
This might seem a bit out of place but please bear with me! I am sure we can all think of ways to spend extra money into things that have nothing to do with saving. However, think of it this way: creating a side hustle and saving your earnings for the down payment will give you more motivation. Firstly, you have a reason to work harder: you have a clear goal to work towards. This will help you with keeping at it, both saving and working on a side hustle require a lot of patience and perseverance. It is a win-win!

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