Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Set a clear savings goal and timeline to stay motivated.
- Track spending habits with a budget and realistic allowances.
- Use small habit changes like saving spare change.
- Reduce non-essential expenses to free up savings.
- Delay impulse spending to boost your deposit.
We understand that saving for a deposit can be one of the biggest hurdles for first home buyers, and that's why The First Home Buyers Club is here to lend a helping hand.
First things first though, you need to have an idea of how much money you spend weekly as well as how much you need to save for your first home deposit. Having a specific target to work towards will help keep you motivated and focused. Pick a number, set a timeframe, and then get busy saving!
We'd like to share with you some ways you can make saving easier and hopefully reach your savings target quicker than you expected!
1. Set A Savings Goal
When achieving any type of goal, it's easier to achieve when you have a good plan in place to keep you on track. First do a budget and work out your essential spending and your discretionary spending to better understand everything that you NEED to spend money on and areas where you could save. This will give you an indication of how much you can afford to save regularly.
TIP: A good way to be mindful of your spending is taking out cash to spend on your discretionary spending. This way you can see your money being spent instead of it being on a bank statement. Remember to be realistic with your plan - you must still allow yourself some luxuries - if you don't you may find it just too hard and give up.
Check out our blog on 7 Steps to creating a monthly budget.
2. Save Your Change
"Look after the cents and the dollars take care of themselves." There are two ways to save your change: in your banking app or by saving your loose coins.
Do you remember as a kid you would have a change jar and save your coins to buy toys? Well, you may not think a lot about loose change, but it can have a big impact on your savings. Every time you take out cash for your discretionary spending put the leftover change from that cash in a jar. Watching the jar fill up over time will be satisfying to see and help keep those mindful habits with your discretionary spending.
Digital Option: ASB helps you to grow your savings without having to think about it. Every time you use your EFTPOS, ASB visa debit card, or electronic from your nominated account it automatically rounds up and puts the extra in your savings. You are in control of choosing how much you would like automatically put in your savings and are able to turn it on and off at any time.
3. Create A Milestone Timeline
Every milestone deserves a celebration in your life and that includes your savings account. Create an achievable timeline that has key milestones along the way. Take the time to understand what you want to achieve with this timeline and why you are doing it.
TIP: Put your milestone timeline somewhere visible that you will see a couple of times a day like on your fridge or pantry. Make hitting those milestones both satisfying and fun by being able to see how much money you have currently saved. Then treat yourself to something when you do hit those key milestones and use your jar of loose change to buy that treat!
Need personalised guidance?
Chat with a First Home Buyers Club affiliated mortgage adviser - no obligation!
4. What Could Be Eliminated?
If you're struggling to save as much money as you need it might be a good idea to look at your weekly expenses. Going through your bank statement and identifying expenses that are non-essential is a good start to seeing what you can spend less on.
Simple Ways to Reduce Spending:
- Buy home brands or alternative products that are cheaper
- Buy a bar of soap instead of body wash
- Choose Countdown brand oats instead of Harraways
- Choose Pam's flour instead of Edmonds flour
- Create a savings account that you don't have easy access to
5. Temptation To Buy
The temptation to keep up with the latest fashion trends, go to fancy restaurants and get a drink with your friends on the weekend can lead to unnecessary spending.
The 30-Day Rule:
If you are tempted to buy something, follow the 30-day rule. Take out the money you may want to spend on this item in cash. Instead of spending money on something you want, you're going to take 30 days to think about it. If after 30 days you still want to make the purchase then do it and if not, you are able to add that cash to your savings jar.
6. Read Books On Saving And Finance
If you're needing some motivation or feel uninspired about saving, reading books on saving and finances is a great resource to increase your knowledge and learn something new. Books are motivating, give you wisdom, and talk about personal experiences. You can learn a lot from reading these types of books and if you don't like reading paper books there are always alternatives like downloading e-books and watching YouTube videos about personal finance.
Recommended: "The Barefoot Investor" is a great book packed full of financial advice and advice on how to take charge of your personal finances.
7. Low Deposit Options
There are many low deposit options when it comes to buying your first home, so don't feel discouraged if you have done all these tips and still don't have enough for a 20% deposit.
A 20% deposit is the ultimate target however, this can often be a significant challenge for first home buyers. Luckily there are low deposit options available. In particular, if you are looking at a New Build property they don't require 20% because the Reserve Bank makes them exempt from loan-to-value restrictions.
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