Buying your first home is one of the most exciting times in your life but saving the deposit can seem like a daunting task. However, it doesn’t have to be that way, as there are many ways you can achieve your savings goal sooner than you think. Also, in recent months, the regulatory landscape has eased the burden for first home buyers. In the lead up to the Federal Election, the Coalition made a $500 million pledge to help reduce the time it takes to save a deposit by cutting the deposit rate from 20 per cent to 5 per cent, making it much easier for first home buyers to enter the property market. Eligible first home buyers will also benefit from the Government’s commitment to cover the difference between the old and new deposit rates, no longer having to factor in Lenders Mortgage Insurance.
So whether you’ve been saving for months or you’re just starting out, here are our top savings tips to help fast track your first home purchase:
Create a budget and savings plan
The first step in creating a budget and savings plan is understanding how much you earn, how much you spend, and how much you need for your deposit. An easy way to start is by looking at your bank statement. Break down your spending into essential items (e.g. food, rent, utilities, transport) and the non-essentials (e.g. eating out, entertainment, new clothes). Then look at where you might be overspending and where you can make small changes to save money. For instance, can you take public transport to work instead of driving, or swap your morning latte with an instant coffee? The little luxuries can really add up — a few dollars spent on a takeaway coffee every day could mean over a thousand dollars saved by the end of the year. Then, set yourself a savings goal for the month and stick to it. If you reach it, see if you can reduce your spending the following month to save more, and so on.
If you are already budgeting, perhaps it’s time to give it a refresh. Take some time to compare your budget against your actual spending and needs — you might find it needs a reality check. For instance, have you stopped using Netflix but you’re still paying for it? Or are you only using half the amount of monthly internet data that you’re paying for? It’s important to review your budget regularly so it stays relevant and keeps you on track to reach your goals.
There’s a chance you could you be spending more money on the essentials than you need to. For instance, when was the last time you compared your electricity and gas provider to others in the market? The same thinking applies to your car and contents insurer, as well as your mobile phone and internet providers. Retailers are always looking for new customers so do some shopping and see where you can get a better deal. You can also use this approach with your food and grocery items. Instead of buying all of your groceries according to a shopping list, shop around for items on special or visit multiple supermarkets to get the best prices. Also, why not consider visiting the local farmer’s markets on the weekend as they often have great deals for seasonal produce and bulk buys.
Reduce your rent
Paying rent at the same time as saving for your first home deposit can be challenging, but it isn’t impossible. Assess your situation for other ways you can save on rent. For example, could you move in with your parents or relatives? If that isn’t an option, could you downsize your current property or move to a cheaper location? Or perhaps you could move into a share house or with friends? Alternatively, with the permission of your landlord, you could look at renting out your spare room. The amount you could save by reducing your rent or removing it altogether could mean getting into your new home in a year, or even within months.
Is your money working for you? Despite record low interest rates, it’s still possible to boost your savings while it sits in the bank. Shop around and see what different bank and non-bank lenders are offering when it comes to high-interest savings accounts, especially for new customers. What might seem like a tiny difference between interest rates could mean a significant difference to your savings over a year or two.
Consider a second job
A quick way to boost your savings is to consider a second job. If you are able to work nights or weekends, a casual or part-time role can supplement your current income and significantly add to your savings pot. While it might not seem like a few extra hours per week will make a difference, in reality it could mean thousands of dollars in only a matter of months.
Do you have unwanted or unused items sitting around your home? Old mobile phones, gym or sports equipment, as well as TVs and laptops could be sold on eBay, Gumtree or Facebook, or even at your local trash and treasure markets. Alternatively, you could hold a garage sale. If you have a lot of household items, including toys, clothing, kitchen appliances and tools, this could be a surprisingly rewarding option.
Unleash your inner creative
Do you have a hobby that could make you some extra money? It could be baking, sewing, jewellery making, painting or photography — there are so many ways to turn your interests into a side hustle. A great way to start is head to your local markets and see what other people are doing, as there might just be a lucrative gap for your talents. Or, maybe you are a bit of a handyman or great in the garden? You could offer your services by putting up flyers at your local shopping centre or in neighbourhood letterboxes.
For all of your property needs, contact your local Peter Blackshaw office.