8 simple rules for saving up for a first home deposit
Saving up to buy a home takes a lot of hard work, dedication and financial diligence. It’s certainly no easy task, especially in this day and age. However, it’s also not impossible, and with a few changes to your lifestyle you may be able to put yourself in an better position to save up for your first home deposit.
The following eight tips may help you in the quest to save that home deposit and buy your first property, with a few tweaks to your current financial habits.
1) Sit down and examine your finances
The first part of saving for a home deposit that you’ll need to keep in mind is that, if you’re like a lot of people, you may only have a vague sense of your financial particulars. You may know roughly how much you make and how much you spend each month, but going through several months’ worth of financial statements will give you exact details.
2) Know what you want in a home
Some homes cost more than others and when you’re trying to save for a massive down payment, it helps to know what you’re looking for in advance.
3) Set a goal
Once you know what your finances look like and the kind of home you want, you can crunch the numbers and figure out exactly how much you’ll need to save for the deposit. Then, you can do a few more calculations to see how long you want to devote yourself to the savings effort.
4) Find some expenses to cut
Everyone spends more money than they expect, and in this day and age, the possibilities are endless. Do you really need all those different streaming services? What about your gym membership(s), food delivery services, a new outfit every month? You may be spending hundreds more than you realise, and that’s all money that could go toward a home deposit instead.
5) Bring in extra income with a side hustle
If you don’t mind taking on a little extra work, finding something low-stress that you like doing could generate extra income, all of which can be put into savings to build your down payment even faster.
6) Divert more of your income
Along similar lines, you might want to look at ways to automatically deduct a certain amount of money from your monthly income directly into a savings account specifically set up for your down payment. That way, the money goes away without you having to think about it, and is in an account you’re less likely to want to tap into for other reasons.
7) Take a look at your debt
Another area where you may be spending more money than you realise is on your credit card debts and other high-interest balances. If you can pay down your balances to more manageable levels, or convert them so they have a lower interest rate, you can devote the savings to building your down payment instead.
8) Talk to your friends and family
If you have loved ones who have already purchased a home, you might be wise to talk to them about how they successfully saved up for that big initial deposit. They might be able to provide key insights that are directly applicable to your situation, and set you on the right path.
In addition, there may also be some who would be willing to lend or even gift you some money to help make that dream a reality. However, if it’s a lending situation, you should have an agreement in writing, just to make sure that everything is properly understood, such as whether there is an interest rate on that loan.
Following the above tips will require a bit of effort on your part, but there’s a clear reward at the end of this process: Homeownership. Once you’re in a position to make a purchase, get in touch with the real estate experts at any Nelson Alexander office and we’ll help you find a property that’s just right for you.