Saving a deposit remains the hardest part of any home purchase. Although Melbourne’s prices are in a slight decline, the average time it takes to save a 10% deposit for a First Home Buyer is still around 5 years.
Here we list some tips that can be adopted to super charge your savings and potentially land your first home quicker.
- Create a budget and stick to it
This sounds easier than reality however hundreds of dollars can be saved if non-essential items are avoided. Taking the time to analyse your current financial situation with focus spent on areas that you can improve is a great start. Print off a 3-month bank statement and understand where you tend to spend money that is not essential. This approach will identify areas that need to be held back or avoided entirely. Dining out, drinks with friends and clothing purchases are just some areas that really chew into savings that otherwise could be put towards a deposit.
Another simple way to reduce weekly expenditure is to take your lunch to work. If you tend to purchase your lunch at work with an average cost of $10 per day then you could be looking at a cost of $2,000pa. Taking your lunch can save you at least half of that cost.
- Deal with your existing debt
Dealing with existing debt should be one of the first areas to be addressed as you embark on your savings journey. Eliminating credit card debt will not only ensure you don’t incur high interest repayments, but it will also help your borrowing power when you apply for a home loan. If you tend to be an impulse buyer and use credit cards for most purchases then it may be worth considering removing that access entirely by cancelling your cards.
- Move back in with your parents
The largest outgoing for most First Home Buyers is rent. If you have the capacity to move back in with your parents then this approach will allow you to grow your savings. Although not the most exciting idea, it can be viewed as a short term solution to get you ahead quicker.
- Create a second income stream
Do you have any skills that are in demand by others? The gig economy has never made it easier to advertise yourself and find people that are willing to pay for the smallest of tasks. Not only will this provide extra funds towards your savings goal but may also reduce the opportunity to be out spending money entertaining yourself during your downtime. Working two jobs is not uncommon so a well-researched and time managed plan will ensure you can keep your life in balance while earning a few extra dollars.
- Look for bargains
Taking advantage of cheaper alternatives is a smart approach to getting your savings to the level needed to land that home deposit. Shopping smarter for groceries and purchasing second hand products is a good way to eliminate expensive purchases that chew into your hard-earned savings.
The challenges of reaching the deposit required to purchase your first home are not impossible to overcome, but do require a level of discipline and focus.