House prices are rising quickly, so you’d be forgiven for thinking that ownership is out of your reach. Whilst it’s definitely more difficult to raise a deposit for your first home, it’s by no means impossible.
You’ll need to be ultra-savvy and prepared to live differently, but you can raise a deposit for a house, on any income.
Here’re 4 ways we’d do it if we were starting over again:
Eliminate your housing spend
Rents rise in line with property prices, making it harder to save a deposit as your rent increases. But, there are ways to reduce (or even eliminate) your rent bill. If you can live out of a suitcase and look after pets, you could become a professional house sitter. If you’re based in a major city, house sitting could be a great way to eliminate your rental payment. Tip: Only apply to house sits with pets that can be left during the day so you can still go to work as normal. Some sites to check out include Aussie House Sitters and Trusted House Sitters.
If house sitting is not for you, there are plenty of other ways to save on your everyday expenses. You could share accounts for Netflix with a family member. Cut your monthly internet bill and use only mobile data. Eat vegetarian meals a couple of times each week to reduce your grocery bill. Running your washing machine on a cold cycle and line drying instead of using the dryer will save you a bundle. All these small changes add up.
Automate and micromanage your money
Set aside a lump sum each payday to go straight into savings, But don’t stop there. If your bank allows it, make regular transfers of incremental savings as they occur. For example, say you save $4.10 by not purchasing a coffee or use a coupon to save $2 off your grocery bill. Make sure you actually ‘save’ those little extras, by immediately transferring them over to your savings account. This technique is a fun way to keep growing your savings account every day.
Make your money work for you
Deciding where to save your money is as important as how you do it. You want to make sure each dollar works its hardest by earning interest in a high-interest online saver or via a term deposit. You might also invest some in low-cost index funds. An online bank will probably give you the best rate of interest, but have a chat to your regular bank and see if they can match the rate. Whichever way you decide to go, make sure you keep your house deposit savings separate from your everyday funds. Your lender will want to see documented savings history when you apply for your home loan, so keeping everything separate from the beginning will make that process smoother.
Saving a deposit for your first house is not going to be easy, but it’s completely possible. Plus once you’ve instilled some frugal habits you’ll be in a much better position to deal with home loan repayments and ownership costs. It’s a bit of hard graft, but it’s totally worthwhile.