Saving money is one of those tricky things in life: we understand how to do it, and often have good intentions, but it’s still a challenge. When you’re looking to buy a home, you need strategies to save money for your home loan deposit.
Buying a home is an important milestone and goal that often requires a large initial home loan deposit. So how can you come up with the kind of money that will help you secure your home loan? Below, we outline five strategies to save for your first home loan deposit – strategies that will help make your dreams come true.
Pay off your debt
It may seem counter-intuitive, but paying off debt is actually a strong strategy for saving a big sum of money. You’re probably aware that credit card companies and other debtors charge interest every month that you owe money. What you may not realize is that carrying a low balance on these cards can save you thousands of dollars every year.
For most people, paying down cards and other debt all at once is not an option. Just remember that consistently paying the minimum balance due is keeping you in a negative debt loop. The bigger chunks you can pay off at once, the better. Just imagine the hundreds of dollars every month that could be going straight into your savings, instead of to the credit card company’s profits.
Get a one-month jump start
In the last few years it’s become more popular to dedicate a certain month to being more mindful about spending. It’s sort of like January, when the start of a new year inspires people to eat healthy and get back to the gym. But with this mindset, it could be any month.
Having a focused effort around saving for a full month can give you a great head start. November has become known to some as “No Spend November,” when all but the necessities are off the table when it comes to spending. When you add up the savings from not spending on dinners out, gifts, clothing, or travel, you can save a good bit of money in the course of a month.
Minimize recurring expenses
In the age of online payments and auto-pay, it’s easy to lose track of where exactly all of your money is going each month. While it makes sense to have things like your electricity bill automatically withdrawn from your account, there may be lots of other recurring expenses that you don’t think about often, but are a drain on your overall financial picture.
Running through your accounts with an eye out for any recurring charges is a great habit to get into so you can manage your expenses more closely. Things like gym memberships, magazine subscriptions, Spotify premium, and news or other web sites that charge for access are all places to look to cut costs. Ask yourself if you really use and need each of these things – and when you answer, think about the big picture. The house you want to save for will likely take priority over a temporary break from your favorite magazine.
Supplement your income
Bringing in more cash every month is what most people think of when they decide they need to save more. Unfortunately, it can be easier in theory than in practice. If you’re already working full-time or managing your home and family, it might feel impossible to take on even more work. The great news is that today’s gig and freelance-heavy economy offers a lot of opportunities for people to work on their own schedule.
If you have a specific skill, you could use your network to book freelance or contract work doing graphic design, writing, or styling. If you love to drive, Uber lets drivers set their own schedule and offers bonuses for meeting certain numbers of rides each week. And there are market research companies that will pay you to be a part of studies for their clients. With the right ambition and a little creativity, you can find ways to make some extra cash that work for your schedule.
Set it and forget it
Of all the things you can do to start saving for your first home loan, the easiest might be to set up a savings system that does the work for you. If you can determine a specific percentage of each paycheck that you can set aside without feeling like your funds are stretched too thin, there are many ways you can automate the process so you don’t miss the money – because you never even see it!
Check with your employer to see if there’s a way to designate your direct deposit checks to be split and placed in different accounts. Putting even 5-10% of your check each month into a savings account that you don’t regularly access will have a huge effect over time. In addition, there are apps like Digit that access your account and determine how much you can set aside each week – and automatically place that money into an account for you.