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I’m prefacing this post with a disclaimer. I haven’t actually saved $50,000 (a house deposit)… but I’ve made a bloody good start. I’m not thrilled at the state of housing prices at the moment (Sydney has reached science fiction levels of ridiculous) but I’m still tucking away my pennies hoping that the housing bubble will burst and when it does I’ll be ready to snap up my dream top floor warehouse conversion in Fitzroy.
That could take years to happen but if I’m serious about saving, I’ll be in a much better position than if I was like ‘Yay! Shoes!’ instead. Here’s how I’m trying to save $50,000 without even noticing…
Get rid of debt first
If you have a credit card that needs paying off, do that first. You’ll have to pay it off eventually so you might as well eat the proverbial frog and get on with it. I know it’s hard paying off stuff you can’t even remember buying but credit card debt is bad debt and you’ve got to take care of that.
Downgrade your current living situation
If you’re paying more rent than you need to, you could consider downgrading. My partner and I live in an extremely small one bedroom flat and we pay the least amount of rent possible. We can absolutely afford something bigger but we are choosing to live in less comfortable circumstances so we can pocket that extra money and put it towards a home of our own. We know the situation is temporary and by making concessions now it will definitely pay off in the future.
Start early
It’s never too early to start saving for a house deposit. I’ve had a little chunk of money I’ve been adding to for about ten years and it’s starting to look pretty good. Every little bit counts so open up a high interest, long term savings account asap and start putting a little bit away each month. If you save $50 per week for 5 years, that’s $14,007 which is nothing to be sneezed at. It’s all about the slow burn with savings so start early.
Rent out a spare room or holiday sub-let your apartment
Although we’re very frugal with our money, we still like to travel and we’ve booked flights for a month long trip overseas next year. Instead of our very cool urban apartment sitting empty while we’re away, we’re planning on renting it out on AirBnB. Our landlord is cool with it and that way our holiday doesn’t cost us anything except airfares. We don’t miss out on travel, we don’t hinder our savings plan and we don’t throw money away paying rent on an empty house for a month.
Have a tangible goal
‘A deposit on a house’ isn’t actually a goal. $20,000 is a goal. $50,000 is a goal. Depending on your financial situation and what kind of house you can afford, make sure you set yourself an amount to aim for. Saving for an aimless theoretical chunk of money won’t help you take your goal seriously.
Put aside a certain amount every pay
Some experts recommend putting aside 10% of every pay check but just do whatever works for you. It can be difficult to work like this if you’re a freelancer or casual employee but choose either a percentage or a specific dollar amount to put aside each pay and be very strict about doing it. You really need to commit, even when times are tough.
Sell things you no longer need
If you have two last model smartphones, a couple of bikes, a leather jacket and spare fridge you never use, take some photos and put them up for sale on Gumtree or eBay. You could have an extra few thousand dollars sitting around your house in items that you never use. A few thousand dollars that would be much more use in your high interest house deposit bank account.
Automate your savings
If you get a regular pay check you can automate it so that the designated amount comes out immediately. That way you don’t even have a choice. Most high interest savings accounts will penalise you if you withdraw funds so once they’re in there, they’re as good as gone. This is a great tip if you tend to self sabotage.
Be consistent
Savings only work if you do it consistently. If you only put money in your savings account twice a year, it’s going to take a very long time for it grow. You need to nurture your savings like a plant. Pay them attention, give them a lil’ loving and they’ll grow in to a very healthy money-tree for you.
Bonus tip: Have a look at the Women’s Money Toolkit from ASIC . It’s an amazing free resource that helps you with your personal finances You simply answer a few simple questions like whether you are planning to buy a house, have a baby, care for someone with an illness or disability and so on. There are tools such as a budget planner, Trackmy Spend app and a parental leave calculator. I’m a massive supporter of women getting their finances under control so make sure you check it out. It doesn’t matter if you’re single, married, have kids or own a business. You need to be in charge of your own finances.
Have you saved for a deposit on a house? How did you do it?
P.S Want more Smaggle? Every day? Every week? It’s up to you cupcake!