1. Work out how much you need to save
While this sounds obvious, most people don’t realise they need to save more than they imagine. There are lawyer fees, conveyancing fees and the big one people forget if they won’t have a 20% deposit – Lenders Mortgage Insurance (LMI). It’s always best to go and speak with a bank (visit a few to see who will offer the best rates) and find out what your borrowing capacity would be based on your current situation and worst-case scenarios. This will give you an idea of how close you are to your goal and what you need to do in order to achieve it.
2. Learn how to create a budget and stick to it
Work out your monthly income and expenses. Identify what’s luxury versus necessary and cut back on expenses that don’t add to your lifestyle. Bringing lunch to work or cutting out takeaway coffee can instantly save you money.
3. Review all subscriptions, memberships, insurances, phone provider and utilities
Research the best deals for gym memberships, car insurances and utility and phone service providers. You don’t have to stick with the one you’ve been with for years while there are others out there who can offer a better rate or service. Most importantly, review your subscriptions. Some may be taken out as a direct deposit and you’ve forgotten all about these. Above all, if you can get items for free (eg. news), do you need to buy that the item (eg. newspaper).
4. Second job
These days it’s not uncommon for some people to have a second (even third for others) source of income. Thanks to the internet you’ve been given access to countless opportunities for that little bit of extra side cash. From freelance work, Uber, Airbnb, Gumtree, Airtasker, survey taking, promotional advertising to old school babysitting and dog walking, the list goes on for that additional money in the pocket.
5. Move back in with family
While not an option for everyone, this is a great way to save on lost rent money.
6. Sell items you don’t need or use anymore
Gumtree, eBay and Etsy can be another great way to make some money on the side. Sell that formal dress you only wore once or that suit you bought for that wedding you went to years ago. You might even have a collectable or vintage item laying around the house collecting dust. Or if you’re crafty sell things you can make and sell at a profit.
7. Deal with current debt
While this isn’t helping you saving for a deposit, debt can hold you back when you apply for a home loan. If you have multiple debts, try and consolidate them into one so that you can save on fees and pay it off quicker if you stick to the set amount. It will also help to pay off more each time (permitting additional fees).
8. Get a term deposit account
Save yourself from any temptation. The idea might seem a little scary, locking away your money, but research to see what the current interest rate is, the length of time you agree to leave the money in there for and any fees associated with a few banks. The longer the term the higher the interest rate.
9. Use your savings account proactively
Save a percentage of each pay check if you’re not already doing so. Also look to increase that percentage if you find you have a little spare by your next pay, it might help to set this up as a direct debit. This account isn’t locked so if you do find yourself caught on a surprise bill, it’s easily withdrawn from. But resist if you can.
10. Eliminate luxuries
Although this isn’t fun, it can be effective. Don’t start by cutting out everything, try cutting one luxury a month to ease yourself into the new lifestyle. Clothing and alcohol are two main luxuries that can help you save, while not being essential to your everyday life.
11. Reward yourself
After your strict discipline don’t forget to reward your saving efforts to keep yourself motivated and happy. The occasional dinner out or movie night won’t cause you to lapse.
Let’s start saving for that new house!