Question – I want to save enough money to put down as a deposit for my first home. I currently live with my folks which is very cheap, but I want my own home on as possible. What’s the fastest way for me to save for the home deposit?
Answer – Great question and good to see that you have a specific goal. You have two key opportunities:
- To save more money
- To make more money.
Below are some tips for both opportunities
1. To save more money
- For the next couple of weeks keep a diary and list all your expenses
- Start eliminating and reducing the expenses. Start with the luxuries which can best be defined as things you want rather than need
- Draft up a new list of expenses and stick to it
- Revisit this list each week to review your progress
- Important – when cutting down expenses don’t overdo it. Cut it down slowly or otherwise you might get too disheartened and simply stop.
- Consult with your local banks and mortgage brokers to determine the size of the deposit that you need to aim for – This is now your savings goal
- Calculate what you need to save each pay-day to achieve this savings goal. You will find the Savings Goal Calculator a very handy tool for this calculation
- Start a forced savings plan with deductions taken directly out of your wages (or primary banks account) and into a high interest savings account. This way you will ‘Save First, Spend Later’
- Make sure the high interest rate savings account is difficult to access. This forces you to carefully consider all withdrawals
- Start searching the property market to keep abreast of price movement and sustain your motivation to continue saving
- Start negotiating on just about everything that you buy whilst saving for your deposit. Not only will you save money by getting a better deal on your purchases, you will also become a better negotiator. This will benefit you greatly when you need to negotiate and finalise the purchase of your new home.
2. To make more money
- Pay off debt as a priority. Interest rates on debt is (usually) greater than interest rates on savings accounts
- Get yourself noticed at work for the right reasons. This will better position you for any pay rises, promotions etc
- Ask for a pay rise! Ask for some over-time. If you don’t ask you don’t normally get it
- If you can’t get the pay rise, keep a look out for other job opportunities with better pay and conditions
- Educate yourself. Ask your company to help with the study costs. Knowledge is power and will lead to better job roles and more money throughout your career
- Sell stuff. Most people have things they don’t need and the web makes it easy to sell just about anything
- Start to network with like minded people. Most good jobs come from people you know. The same applies for good money making ideas that could work in your local area
- Set yourself some career goals
- Protect yourself. Make sure you are insured against sickness and accidents or otherwise, all your saving plans could evaporate very quickly if something goes wrong.
One last important tip – don’t forget to enjoy yourself. You can easily fall into the trap of becoming too focused on the savings goal and end up missing out with friends and family. This can have a negative impact on your motivation to achieve the goal of owning your own home.
Recommended reading – Five Ways to Save Money – Buying Your First Home