- Posted 10 Dec
- 0 Comments
As a first time home buyer, you’re going to be making the biggest investment of your life. There are going to be many costs involved, and the most important and first of these costs is the deposit.
Typically you’re going to need to put down between 5-20%. If you’ve got that amount of money right now, than you’re in a terrific position, ready to make the first move on your dream home.
For the rest of us however, getting to that 20% is going to mean one thing – planning and sticking to a budget. We like to think about a budget, at least when saving for a deposit, as a “spending freeze”.
This is a period of time where you literally stop spending whenever and wherever you can. This is a great way to check your financial priorities, account for what you have, and boost your savings.
So what does a two-week spending freeze look like?
1. Decide where you’re saved money will go
Set a goal! If your goal is saving for a down payment on a home, then work out how much you can realistically save each week. While you are looking to ‘freeze’ all spending, you still need to allow yourself money to get food etc. The point of a two-week spending freeze is to see where you’ve been spending unnecessarily and areas where you can cut back.
Once you’ve done that, then figure out where the savings will go – will you put them in a term deposit or a serious saver account? Chat with your bank about these options.
2. Eating out
We all love to go out to eat, as well as enjoy a few beverages, particularly during warmer weather. Well it may not be as fun, but if you look through your pantry and see how many meals you can actually cook, it will save you a lot of money.
Going out to eat is very expensive, and by planning meals ahead and cooking yourself, you can really save a lot.
Of course kicking that luxury coffee habit is going to take discipline, but stay focused on the end goal. In the end, you’re going to be a lot happier as a home owner than you will from that triple espresso mocha latte!
During your spending freeze, you’re going to want to cut back on the amount that you drive your car, as the cost of petrol really adds up quick.
Try taking public transport during the duration of the spending freeze. You might actually find that it eases your mind a bit, not having to worry about parking and vehicle maintanence. It’s also better for the environment.
A two-week spending freeze may not get you to your 20% deposit quickly, but it will start the process of maintaining a budget to reach that goal.
It will allow you to jump-start your savings, so that you can become a home owner and take out a mortgage when you have the necessary funds.
You’re going to have to flex you’re will power muscle, but like any muscle, the more you use it, the stronger it’ll get. Implement a spending freeze every month, and you’re sure to have the deposit for your dream home sooner than you think.
If you need help working out a budget or figuring out how much you can borrow based on the savings you currently have, get in touch with one of our experience home loan team members today.