The perils of renting are many; for one thing, it’s expensive. In regional NSW, people spend almost a quarter of everything they earn on rent, move to Sydney and that shoots up to around 40%. That means close to half of the money a Sydneysider earns evaporates, paying for accommodation that is essentially temporary. Add the perils of intransigent landlords, troublesome housemates and mouldy flats, and buying starts to look like a pretty great option.
Saving for a Home Isn’t Easy
Saving for a home is a challenge, especially considering you’ll likely be paying rent while you save. Even if you can access financial help, such as a first home owner’s grant, you’ll still need some budgeting tips to get there. You’re usually going to need $10,000 to $30,000 on top of your grant to afford that first deposit. It’s a big task but don’t worry, it’s not impossible – here are some tips to get you on your way.
Save 10%-15% of Every Single Pay Cheque
Although this advice is quite basic, it really is effective and quite easy to do. Do some budgeting to decide on a percentage you can afford to quarantine each week or month then take the following steps:
- Set up a savings account, preferably in an account you can’t access until a given date. You could also try a high-interest account that rewards you for not withdrawing.
- Set up an automatic transfer of 10%-15% for the same day you are paid – this will stop you from skipping transfers.
- Think about your costs and make sure you have ways to keep life going with the temporary pay-cut – maybe you’ll have to cut back on alcohol or eating out, but it will be worth it in the long run.
Have a De-Cluttering Sale
Chances are you have plenty of belongings around the house that you don’t really need anymore. Think movies, CDs and books, jewellery you never wear, clothes that don’t fit anymore, furniture you don’t need, instruments you never play. De-cluttering ahead of moving into your new home is a great idea anyway, but don’t just throw stuff away – turn it into capital! Use eBay, Gumtree, and garage sales to sell off as much as you can, for as much cash as you can. It could be a great boost to your savings.
Pay off Your Debts
Paying off your debts makes sense for two main reasons: it will increase the amount of money you can borrow, and it will free up your cash for mortgage repayments. While this will cost you money initially, you’ll be saving on interest repayments. This should be one of the first things you do before you start your hardcore saving or even think of approaching lenders.
Limit Your Luxuries
It’s horrible but true: cutting back on the finer things is an effective strategy for saving money for your first home deposit. You can start by eliminating or downgrading the luxuries from your life, using the cost savings to fund a savings account. You don’t need to become an ascetic monk but just look at ways to find savings – no alcohol this month, pack your own lunches, no eating out or ordering in, and so on.
Work Hard for the Money
If you’re serious about saving and your finances are already stretched to capacity, consider looking for extra work. By working a few evenings a week, you could easily add $1,000 a month to your savings. Think babysitting, freelance writing or graphic design, tutoring high school students or teaching English to foreigners.
Consider Every First Home Option
You don’t want to limit yourself for an extended period of time just to waste your hard-earned savings. When it’s time to buy, consider building an affordable, contemporary home in Sydney. You are in charge of the specifications, budget and appearance while receiving expert advice every step of the way. Contact New Living Homes today on 1300 366 766 or visit our design page for more information.