If you're a first-time home buyer, the prospect of saving up for a house deposit can feel overwhelming. Saving enough money for a deposit may not be easy however with the right strategy it is most definitely achievable. Implement a few of these tips to start saving for your new home!
1. Determine How Much You Can Afford to Put Away Each Week
It might seem obvious, but working out the maximum amount you can afford to set aside is an important first step. If possible, start with 10% of your income and work up from there. Don’t be disheartened if it is not a huge amount, after all something is better than nothing and you’ll be surprised at how quickly it adds up over time!
2. Set Aside Savings as Soon as You Get Paid
Whatever you’re able to put aside, transfer the money into a savings account immediately after your pay hits your bank account. You are less likely to spend your savings if it's separated from the rest of your money from the moment you have access to it.
3. Create a No-Frills Budget and Stick To It
When you're saving for a house deposit, you may have to forgo some luxuries for a little while. Create a budget that cuts out the things you don't need like expensive dinners or new clothes every month. Once you've created your budget, you can help yourself stick to it by using cash. For example, let's say you've budgeted $100 for groceries for one pay period. Take that $100 out of your account and put it in an envelope labelled "groceries." Having a set amount available will make you think twice before over-spending.
4. Open a High-Yield Savings Account
You can earn extra interest by shopping around for the best savings accounts to suit your situation. Some banks offer additional incentives and bonuses for keeping a certain balance or depositing a fixed amount every month. In the beginning, earning 1-3% interest may not seem like much however as your savings grows so too will the free money you earn in interest!
5. Consider Location Incentives
Some geographic areas such as regional Victoria offer substantial benefits for first-time homebuyers. The Victorian regional government just announced that they will be doubling their grant for first-time home buyers from $10,000 to $20,000 for people building in regional Victoria. By considering location, you can get a big boost from the first home buyers grant which can help expedite the goal of owning your own home.
As with any long-term goal, it's easy to become discouraged and be tempted to give up. Remember the end reward: a house to call your own. Visualise your future home when you're feeling frustrated. Imagine painting the walls your favourite colour. Daydream about planting flowers in the front yard in the spring. As long as you keep your aspirations reasonable and grounded in reality, remembering the goal can help you through the difficult period of saving.