How to Purchase your First Home, Faster!
Is the key to saving a home deposit as simple as giving up smashed avo toast for breakfast? Well not quite, but spending less does make a difference.
The First Home Buyer journey can be tough. It's the first major financial decision you might have to make on our own. You have to be clear about our expectations: What you want vs what you can afford, which areas you think you’d like to live in and what the pros and cons of alternatives can be. The first step with any financial decision is to draw up a budget.
it's clear that you will need a financial strategy right at the beginning to start saving money for the deposit. On top of a budget, a savings plan and strategies such as a high-interest savings account, an effective way to save is to reduce or eliminate expenses.
Find savings in the essentials
Be honest with yourself about how much you want this house: what could you live without in order to reach your goal? Some of these suggestions will even have a healthy knock-on effect:
- Reduce your weekly alcohol intake
- Quit smoking
- Avoid buying takeaway food and limit dining out
- Walk or cycle instead of driving short distances
- Catch public transport if available (instead of driving/paying for parking)
- Pack yourself lunch each day for work
- Develop a weekly meal plan and corresponding grocery list so you know exactly what groceries you need
- Eat those leftovers instead of throwing them out!
- Set aside a budget for eating out/takeaway and stick to it.
- Look through your bank statements: what fees and charges can you avoid or reduce?
- Review your current utility suppliers and see what savings can be gained by switching. Most companies offer a large discount for paying on time or via direct debit
- Make sure you’re paying off debts or credit cards completely each month or as much as possible, to avoid the added expense of paying interest.
- Cancel your gym membership and/or personal training sessions
- Reduce rental cost by moving to a cheaper property or move in with your parents/relatives (short-term discomfort can pay off in the long term).
Most importantly, keep track of your progress. Having a large goal broken up into several smaller and more manageable milestones will make the journey to homeownership a lot more enjoyable.
Reduce common overspending
If you spend excessively on things like buying clothes, going out or expensive hobbies, it may be unrealistic to cut the expense entirely. Set a weekly or monthly limit and reduce that limit over time.
A survey of more than 1000 Australians showed that 73 % have a problem with overspending. In particular, people tend to go overboard Christmas rolls around.
To reduce gift expenses, be like Santa: make a list (and a budget). Buy only planned items within your allocated budget – then stop! Ask your family for support; it’s easier to put a cap on gift values if everyone else does too.
Another common way Aussies overspend is on holidays. CommBank research has shown that a third of holidaymakers spent more on their trip than planned. Do your research and set a daily budget.
Costs that could be eliminated
Look for opportunities to eliminate costs. Cancel unused services. Update your internet or mobile plans if you’re always paying for excess data.
Ask yourself: are you really using that gym membership? Are you getting value from your subscriptions? Remember, every wasted dollar is money you could be spending on your own home.
A budget should never be ‘set and forget’ it should always be ready for review. If you need help to establish your budget to get into your own property in Adelaide, please email Nick and set up a free initial consult with the result of your personal budget.
Budget discussion complete, what did you discover about your current spending habits? What can be cut from your lifestyle to help propel you towards that house deposit? It’s amazing how quickly that daily coffee or lunch at work can add up! Another way to look at the problem is to think about increasing your income. Could you:
- pick up extra shifts at work?
- Ask the boss for a raise
- Sell surplus belongings online
- Get a second job