Homeownership can at times, seem like an impossible dream. With property values skyrocketing and wage growth stagnating, it’s harder now than it ever was to own your own home. Despite the hostile economic climate, its still possible for an ordinary Australian to own their own home.
The first hurdle you will face is saving up enough money for a deposit, this can be a considerable lump of money but it’s still achievable with the right game plan. A good home loan calculator can give you a good idea of how much you will need to save. As a rule, the deposit will be %10 of the value of the home. So, a $500,000 home will require a $50,000 deposit.
Before you start on your savings journey you will need to have an end goal. How much of a deposit do you need? When do you need it by? Having a concrete timeline and set goal will be make sticking to plan that much easier.
Firstly, you will want to get a solid plan of what your weekly or monthly expenses are. Be honest with yourself, if you are spending $100 a week on novelty spoons, don’t beat yourself up, just accept it, note it and move on. Hopefully, now you will have a crystal-clear picture of your spending habits. Using this information, you can now form a budget.
The core of the plan, the humble budget. In the monitoring phase, you will have noted all your reoccurring ‘fixed’ expenses. Expenses like rent, phone bill internet bill, etc. These core expenses are not likely to be cut so work around them. Better deals can be found on phone and internet services as the market is very competitive. Don’t be afraid to shop around for things like insurance, banking, and electricity.
Luxury items like coffee, alcohol and fast food can be hard to cut out emotionally but doing so will save you money and maybe even your health. The key to a good budget is to be consistent and to keep checking back in. Knowing how much money to save is easy with tools like house loan calculators.
Get rid of debts
Nothing kills savings faster than persistent debt. Hopefully, you will have identified debts in the monitoring phase. Debts are a necessary evil in this modern world and having small manageable amounts of debt is ok. If you have many high-interest debts like credit cards, it would be wise to consolidate them all into a low-interest debt. Aim to get rid of any debt as soon as possible, not only will you have an increased ability to save, but your credit history will look better too.
This step doesn’t require much explaining but it begs some caution. Once you have established a regular savings habit, make sure to monitor your progress, again, checking in with your budget. Its possible to make a little extra cash by placing your savings in a high-interest savings account.
Saving a large amount of money can be very difficult so don’t be afraid to seek help. Moving back in with your parents might seem like a step backward, but if it helps you reach your deposit quicker than its definitely a step forward. As a first home buyer, you may be eligible for some government assistance.
Owning your first home may seem like a daunting task, but with some proper planning and a solid budget, you can be well on your way to saving a deposit for your first home.