How to save your first home deposit
Saving enough money to buy a property might seem like an impossible goal. But with the right strategy and motivation, you can start budgeting for that deposit.
Owning an amazing home is a dream most of us cherish. It’s a way of having security and control over our lifestyle that just isn’t possible when we rent. But even with this compelling goal in mind, it can be tough to be spending less and making sacrifices for that all-important deposit. Here are a few ideas for starting money-wise habits that will see your savings grow:
1. Decide what’s important – goals and lifestyleWhen you’re making a change, it’s more likely to stick when you connect your actions to your values and priorities. Take stock of what matters most – whether that’s friends and family, learning new things or keeping fit – and then look at how you can focus on those things more while spending less. It might mean giving up your gym membership and joining a running club, or having pot-luck suppers at home with friends instead of restaurant meals, but remember: the sacrifice you make now is worth it for the benefits it’ll bring later.
2. Set the bar – make it achievableSo you’ve set your heart on a property in a suburb you love, even though it might take you five years to save the deposit. If your dream home costs $650,000 now and values are rising at, say, 5% per annum, a 10% deposit will be significantly more than $65,000, so you’ll need to budget accordingly. Make your goals realistic and you’ll be in your own home and accumulating equity sooner.
3. Make a budget – and stick to itUsing an app like Pocketbook or ASIC’s TrackMySPEND can help you get a handle on your budget fast. It still takes discipline to log your lattes, grocery bills and insurance premiums, but charting your spending patterns makes it easy to see where you could be saving, particularly on discretionary items like clothes and entertainment.
4. Use the right tools – boost your financesTake the time to learn about the financial assistance first homebuyers can access, and make sure you’re set up to get the maximum benefits. This extends to you bank accounts too – choosing the right account can bring higher rates of interest for your savings, particularly with extra incentives for making regular deposits. And penalties for making withdrawals will make you think twice about dipping into your nest egg. Investment products like shares and managed funds can bring higher rewards, but they also carry more risk. You’ll need good advice, patience and nerves of steel to get the best returns as markets rise and fall.
5. Stay motivated – whatever it takesIt might mean sticking photos from your favourite interiors magazine to your wall. Or checking out home décor ideas on Pinterest. Maybe all you need is to keep a tally of how much you’ve saved, or to bring lunch to work instead of going to the food court every day. However you do it, it’s important to stay determined and motivated by choosing ways to remind you of your goal, celebrate your progress, or both.
6. Make a noble sacrifice – but don’t take it too farGiving up everything that brings you joy – from yoga classes or a glass of wine to a weekend away with friends – just isn’t worth it if you feel like you’re serving a sentence and real life is only going to start when you’re in your own home. Make your occasional splurges matter by spending on things that are a priority (remember those lifestyle goals?) and deliver memorable experiences or value that will last.
The information in this section has been prepared as general information only without consideration for your particular investment objectives, financial circumstances or particular needs. Read the full disclaimer.