HOW TO SAVE FOR A FIRST HOME DEPOSIT – FAST!
Almost everything about buying your first home is exciting. What’s not – is coming up with the money for a deposit. It can be a tiring and lengthy ordeal but keep in mind the more money you put down upfront, the less you’ll have to borrow.
It seems the longer you take to come up with the deposit, the higher housing price you pay, so get saving now!
There are many ways to save for a home that don’t require major changes to your lifestyle. With a good savings plan and some discipline, you’ll soon have the deposit for your home.
- Take advantage of FHOG
Depending on your state, the first home owners grant can give you a good kick start. You may also be able to access stamp duty exemptions and other grants.
- Pay off existing debt and avoid credit card debt
Having outstanding debts can be a crucial set back and could compromise your chances of being approved for a home loan. While saving, consolidate your debts into one and make it a priority to pay what you can. Reducing or eliminating these will also increase your borrowing power.
- Consider moving back home or shared accommodation
It doesn’t sound appealing but moving back into the family home could get you saving a lot faster. Rent is likely to be one of your biggest expenses so if it is an option – grab it with both hands.
- Sell preloved goods on Gumtree
Selling what you no longer need around the house is not only a good way to make a quick buck but also will give you some more room around the house and garage. Gumtree and Ebay are excellent sites to sell, especially with your non depreciating assets like big ticket baby items, jewellery, furniture, designer clothes and antiques.
- Put away 20% of your wage
This tip always works if you have good discipline. As soon as you get paid, pay yourself 20% into a saving account – preferably one that is not easy to access. Don’t try and live the entire month, then save what’s left. Not only are you not in control but there is no consistency nor ability to accurately project or budget.
- Rent out a room
Make sure you check with the landlord or on the agreement if you’re currently renting. Depending on the area and amenities, an unused room in the house can get you up to $200 a week. That’s over $10,000 a year if you start saving early.
- Shop at discount stores or bulk buy
You don’t have to live off less to be able to save money, you just have to buy more with less. By bulk buying at shopping at discount stores like Aldi for your groceries can make a huge difference. Let’s face it, a big chunk of our money goes to food so try generic brands or buy on coupons if that’s an option.
- Reduce your luxuries
It’s important to still enjoy life’s little luxuries but perhaps think twice before you book that grand holiday. If a break is what you need, try camping or rent a holiday house instead of staying in an expensive hotel. Instead of buying that $3.50 coffee every morning, make a coffee so you can have it on the way to work or take advantage of the free tea and coffee facilities in your office. You don’t have to eliminate the luxuries but perhaps cut down or look for a more cost effective alternative. Save enough of these little amounts and it all adds up.
- Get a part time job
It’s obvious, but not an option for everyone. Getting a part time job will increase your financial health in more ways than one. Working more than the average 40 hour week keeps you busy and focused, meaning you will have little to no time free time to waste on entertainment like movies, video games and other sometimes costly activities like discretionary shopping.
- Set yourself a budget and stick to it
Once you have set up your budget you can easily see where your money is going and how much you have left to save and spend. You don’t have to live just above the poverty line but not spending on non-essential items and impulse purchases can do the trick, as this type of spending delays your dream of owning your own home.
- Get a high interest saving account
Make your money work harder for you by getting a high interest savings account. Maximising what you can without using any additional money is smart. Be sure to look at account keeping fees and work out if this is the right savings option for you.
- Shop around for deals
These can be available from many service providers, from bundling all your insurance with just one insurer to only buying from supermarkets that will give you points and or fuel vouchers.
Contact Mitesh for a FREE no obligation consultation on your borrowing capacity and mortgage tips on 03 8390 5855 or email mitesh@thinkandgrowfinance.com.au