Is the key to saving a home deposit as simple as not buying a coffee each? Well not quite, but spending less does make a difference.
The true key to saving for a home deposit is to establish a structured budget. This will ascertain your savings plan. With the implementation of a few strategies such as depositing funds in to a high-interest savings account reducing your cost of living, avoiding parking fees or e-tags can all contribute to improving your savings.
Start by understanding your budget
Our busy lifestyles often get in the way of reviewing our financial goals. We often buying things and entertain ourselves to keep ourselves sane. However you need to stop are see where you are spending and how. The credit card can be a very sneaky means to spend more than yo should.
There are many online calculators and tools that help you record what your cost of living.
Our classic example is to download an app that helps you track your personal expenses on the go, like ASIC’s TrackMySPEND.
Reduce your spending habits
Another way to save for a home deposit, is to cut back on your spending habits. We all work hard and we all deserve to unwind a little, but when accumulating cash, you need to cut back on areas you are overspending. Perhaps limiting your money towards clothes, cutting back on restaurants or alcohol, reducing some of your common sports or activities.
This can be tough at first, but a little compromise will may a large contribution.
The most common time of year where people lose their way in saving fora home deposit is during the Christmas season. If you celebrate this time of year or not, many still spend effortlessly. Impulse buying can be a big problem for many, so try to find new ways to make you fill fulfilled or happy.
Another big cost saver can be your choice of annual holiday. We get it.. we all need to get out of routine and have some fun. If you have children, you’ll appreciate that more than anyone. When thinking of your next holiday trip, look to cut costs. Consider alternatives, such as camping, road trips etc. They may save you thousands of dollars compared to a trip to Indonesia, New Zealand or Thailand.
Reduce your cost of living
In addition to cutting back on your spending habits, you need to look at reducing your cost of living too. We all need to eat, while we all need to use utilities in our home. Many of these costs can’t be avoided, but you can plan some strategies to reduce some of these.
If you are a first home buyer, perhaps living with parents or family can help reduce the cost of rent/utilities. Perhaps sharing a home with friends is a more appropriate way to reduce them.
Food is a guilty pleasure. Establishing a meal plan for the week will help you visit the supermarket less. Buying some food in bulk may make the food bill more cost effective. Having a meal plan in advance may allow you to avoid dining out for a while.
Learn what shops are around you. Try to discover who sells certain foods cheaper. Rather than taking the easiest choice and buying a loaf of bread at the petrol station, look at cheap alternatives like a bakery or supermarket.
Car expenses are likely one of the highest forms of cost of living. Perhaps you need to make a more drastic decision and use public transport, keep one car between a couple, avoid using e-tags etc.
Many of these changes can help save for a home deposit. If you remain consistent, you will soon see results.
Look at what can be completely removed from your budget
Reducing your cost of living is difficult, but eliminating something from your budget can often be more challenging.
We all want to live life to the fullest, but in the short term, taking something away while you save will help immensely. You may have certain memberships that aren’t being used properly like your gym pass. Exercise is important, but can you remain fit and healthy outside the gym? You may have a golf membership or a subscription that’s not being used well.
Saving for a home deposit isn’t always easy. However, once you set up a budget and implement it effectively, you may find this experience mentally rewarding as it is financially.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
December 2018
