The Starbucks Method of Saving for a Down Payment

That tempting Starbucks run is hard to resist for many Americans. With tasty drinks and snacks just a quick trip away, it's easy to see why the average person spends around $12 per visit. But small daily expenses can add up substantially over time. What if you redirected that habitual Starbucks splurge towards saving up for a big goal instead - like a down payment on a home?

Saving $12 a day might not seem significant at first. But when turned into a consistent habit, the impact compounds. Skipping just one Starbucks run per day over a month nets you $365 in accumulated savings. Stick with this small sacrifice for 10 months straight and you will have amassed $3,650.

Now imagine putting those redirected funds towards a future down payment. Most conventional mortgages actually only require 1% down to buy a home, given you meet the lender’s income qualifications. At $365,000, that 1% down payment threshold sits right around $3,650. See where this is going?

With some focused financial discipline over a 10-month period, all those skipped Pumpkin Spice Lattes or Caramel Macchiatos could add up to the full 1% down payment on a $365,000 home. Not too shabby for giving up a daily luxury!

BONUS TIP: Go open a savings account at a small bank on the other side of town. Tell them you do NOT want a debit card (we’re going to make it really hard for you to be tempted to use this account). Then when you get paid set up an auto deposit for $365 if you are paid monthly, $182.50 if you are paid twice a month, or $168.46 if you are paid bi-weekly.

So next time you grab your wallet and start daydreaming about that Salted Caramel Mocha, ask yourself this question instead: do you have the dedication needed to swap that Starbucks splurge for 10 straight months to save up for a home down payment? It might not be easy, but just think - future you sipping coffee on the porch of your new place sure would thank you!